Speculation is referred to as the purchase of financial instruments with the expectation that it will become more valuable or profitable in the near future.
Decisions of speculative investors are based on technical analysis rather than fundamental analysis of forex trading. They are more active traders than the “buy and hold” investors and seek profits from a short-term price change.
Forex bulls and bears
One of the physiognomies of speculators is that they willingly trade in both bear and bull markets and they are happy with both short selling and buying long.
Bullish speculators expect the prices to rise. A bullish speculator buys securities with the expectation of selling them at a higher price in the near future. On the other hand, bearish speculators expect the prices to fall in the near future. A bearish speculator sells short the financial instruments with the purpose of profit from repurchasing them at a lower price in the near future.
The forex market is famous for speculation due to constant changes in the exchange rates between the currencies based on intraday and long-term trading. The forex market also provides many trading opportunities because of the various currency pairs available for trading.
For instance, the US Dollar can be traded with a dozen different other currencies all over the world. Most commonly traded pairs are USD/JPY, EUR/USD, and GBP/USD. Best Forex trading Platform is also popular due to the high level of available leverage and it makes it easier for the trader to make good profit by the using a small amount of capital.
Bulls in forex
As we know that bulls are the traders who expect the price to go up. A bullish trader buys long positions because of increasing demand and potentially rise in the price of any CFDs Trading instrument. Fundamentally, in the bullish market, the economy is going well, GDP is growing, the unemployment is reducing, and prices are rising.
Bulls are intended at the increasing capital by market growth. They aim to buy and resell in the near future at higher prices. That’s why, when quotes are growing, the trends and markets are referred to as bullish.
Bears in forex
Bears expect the prices to go down. They are pessimistic about the rise in prices. Bears try to short sell the currency pairs and buy them at a cheaper price in the near future. Bearish traders pursue to reducing prices just like the bear put-down its paws downward.
Fundamentally, in the bearish market GDP growth is declining, prices are falling and the unemployment rate is rising. Prices constantly fall in the bearish market under the pressure of negative news. When quotes are falling, the trends and markets are known as bearish.
When the market changes
The bearish market perhaps becomes bullish at any time. This generally happens when the market moves into the oversold zones and present prices are not suitable for the sellers. Positive news also leads to a change in trend. The bullish market exists before moving into an overbought zone or before the negative news released.