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What are bull and bear markets?

In one line: A bull market is a long stretch of rising prices. A bear market is a long stretch of falling prices, often called after a drop of 20% or more.

Trading glossary · Updated 2026-10-21

Where the names come from

A bull attacks by pushing its horns up. A bear swipes its paws down. So "bullish" means expecting prices to rise, and "bearish" means expecting them to fall.

A simple example

A stock index climbs from 4,000 to 4,800 over a year, with only small dips along the way. That's a bull market.

Then it falls from 4,800 to 3,840. That's a drop of 960 points, or 20%. By the most common rule of thumb, a fall of 20% or more from a recent high is called a bear market. A smaller drop, around 10%, is usually called a correction.

The 20% line is a habit of the financial press, not an official rule. It's simply a shared way to talk about it.

Why it matters

The big picture sets the tide. In a bull market, dips tend to get bought. In a bear market, bounces tend to get sold. Neither is guaranteed — but trading with the tide is easier than swimming against it.

That's the same idea as checking the bigger chart before the smaller one. Our guide on multiple timeframe analysis shows how to stack them.

A common mistake

Calling a new market after one bad week. A few red days inside a bull market is usually just a pullback. Labels like "bull" and "bear" describe months, not days.

The opposite mistake happens too: assuming a bull market means every trade will go up. Even in strong years, many days fall, and any trade can lose.

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