What is Bull/Bear? Its meaning and origin. Symbolic keywords in the market

Not only in FX trading, but anyone who has been involved in the market has seen the term “bull bear” at least once.

In this article, we will tell you the meaning of “bull bear,” its origin, and various related information.

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The meaning of bull and bear is simple. It’s used in a variety of market situations
There are many theories as to the origin of the names Bull and Bear
Bull-Bear Index, an indicator showing the percentage of bullish and bearish groups

The meaning of bull and bear is simple. It’s used in a variety of market situations

Bull is a market term meaning “bullish, buy, rise,” while Bear means “bearish, sell, fall.

Since the single term “bull/bear” contains various nuances, it is used in a variety of market situations.

For example, a market situation with a clear uptrend is called a bull market. A downward trend is called a bear market.

Although the terms “bull” and “bear” are mainly used in the stock market, they are actually used in all financial markets, including foreign exchange trading (FX) and futures trading.

In the stock market, a bullish view that the market is about to rise is sometimes expressed as “We are about to see a bull! in the stock market.

It is also used to express the mood or atmosphere of market participants, for example, “The market is scared of a bear market right now.

As the names “bull” and “bear” suggest the image of a bull and a fierce bear, the words are appropriate for indicating the reality of the severe market conditions, and are thought to be easy to express one’s feelings about the market situation and the market.

As a slightly special case, the rate above the moving average (MA) is called a “bull,” while the rate below the MA is called a “bear.

In this case, the judgment of whether the price is a bull or a bear depends on the parameters of the moving average (i.e., the average rate over what period of time is used), so it is meaningless unless there is a consensus (e.g., a 200-day moving average).

However, there are a certain number of traders who prefer to use the term “bull/bear” because the constant use of moving averages in their trades can serve as a “yardstick” for reading the collective psychology of market participants.

There are many theories as to the origin of the names Bull and Bear

But why did we start calling rising and falling markets “bulls” and “bears”?

Let us trace the origin of these terms.

The most popular theory about the origin of this word

When a bull attacks an opponent, it thrusts its horn upward from below.

The bull’s horn is said to be reminiscent of a rising market, hence the term “bull” for “rising, bullish”.

When the bear attacks an opponent, it swings its sharp clawed hand down from the top to the bottom.

The bear’s appearance evokes the image of a falling market, which is why the term “bear” is said to have been coined for “falling, bearish”.

This is the most popular origin of the term “bull and bear.

The bull and bear are reminiscent of the natural environment of the U.S. and Canada, which seems very “typical”.

ブルベアぬいぐるみ（リバーシブル）

トレーダーズショップ開店一周年に誕生して以来、ずっと売れ続けている人気ブルベアグッズNo.1。リバーシブル仕様なので、熊を裏返すと牛があらわれます。

Originating from a standing transaction on a U.S. stock exchange?

In the old days, trading on the U.S. stock exchanges was conducted by communication among the members of the trading floor (as was the case on the Japanese stock exchanges until the introduction of information technology).

The trading floor was a very large space where stocks were bought and sold, and it was so noisy with people’s enthusiasm and frenzy that it was impossible to have a proper conversation there.

Therefore, the signing (hand gestures) using hands and arms was used for trading.

Here is a video that clearly shows how it was done in those days. It shows how stocks were traded on the Tokyo Stock Exchange at the time when trading was conducted on the auction floor.

It is a valuable document, so please take a look.

As you can see, they used hand signs for buying and selling.

And in the U.S. stock exchanges, when “buying,” the sign was made by moving the hand from front to back.

The theory is that the bull came to represent “buy (bullish)” because of its resemblance to a bull thrusting its horn up.

The word for “sell” was “bear” because it resembled the motion of a bear lowering its hand.

There is a surprising theory that “bull baiting” is the origin of the word

There is an interesting theory that provides a clue to the origin of why “bull” and “bear” are used in the first place.

In England from the 18th century to the first half of the 19th century, bull-baiting, a spectacle in which dogs and bulls fought, became very popular and was widely practiced.

Similarly, there was bear-baiting, in which fighting dogs fought bears.

Small fighting dogs were even bred to create such dramatic scenes in which a small dog fights a large bull or bear and wins.

Incidentally, there was also a small fighting dog breed called the Staffordshire Bull Terrier.

It is thought that this cultural background naturally led to the image of “bulls and bears” by combining the bloodthirsty heat of the market and the frenzied dogfighting matches.

Is the word “bear” derived from the word Hibernate?

Furthermore, the origin of “Bear” is as follows.

Bears hibernate in winter.

In other words, bears in winter are “totally inactive” (not moving).

So, the theory goes, a bear is when people sell off their stocks and the market falls, or when people leave the stock and currency markets.

This theory was new to me when I looked into it, but I couldn’t find any more information about it on the Internet.

The theory of the “bear’s skin that doesn’t get taken” instead of the “raccoon dog’s skin that doesn’t get taken” theory

Another theory is that it comes from a certain “proverb”.

There is an overseas proverb that says, “Sell the bearskin before you catch the bear.

Furthermore, there is a cautionary expression, “Don’t sell the bearskin before you catch the bear!” is also used as a cautionary tale.

This is the same meaning as the Japanese phrase “the skin of the raccoon dog that has not been caught,” which means to express greed, thinking about the profit of the skin even before catching it.

Once upon a time, when the U.S. stock market was in a major crash, some shrewd market makers made a killing by shorting large amounts of stocks.

Incidentally, the famous marketeer Jesse Livermore was one of them (his nickname was the Great Bear!).

Short selling is simply a method of margin trading in which one takes a position by pretending to have sold a stock even though one does not have the stock on hand.

Reference　用語集「空売り（からうり）」日興証券SMBC

In other words, they were selling bearskin before they caught the bear.

The short-sellers showed such impressive skills that they were able to sell the bearskin before they caught the bear, so to speak.

The theory is that the strong impression they left on the public led to the association of the word “bear” with the word “crash”.

In Japanese parlance, a bull bear and a raccoon dog would be the same thing, but this makes the bull bear sound like a moron.

Bull-Bear Index, an indicator showing the percentage of bullish and bearish groups

We have looked at the various origins of the terms “bull” and “bear,” but in the U.S. stock market, there is one that is also known as the bull-bear index.

The Bull/Bear Index indicates the ratio of bulls to be bullish and bears to be bearish.

For example, it is an indicator that shows that “about 60% of the market participants are bullish” on the current situation.

Type of Bull/Bear Index

There are two types of Bull/Bear indices.

One is the Investor Sentiment Index published by AAII (American Association of Individual Investors).

The other is the Sentiment Index, published by Investors Intelligence.

The Investor Sentiment Index is a survey of AAII member individual investors to determine their percentage of “bull, bear, or neutral” views on the outlook for the U.S. stock market.

The Sentiment Index is published by an independent research firm that surveys market reports and similarly surveys the percentage of bulls, bears, and neutrals.

Investor Education: Stock research, tools, publication, investment clubshttps://www.aaii.com/

Reference　American Association of Individual Investors

Reference　Investors Intelligence

Its usage is a “reverse indicator”

Interestingly, or rather naturally, this is used as a “reverse indicator.

This is because the fact that many market participants feel bullish means that the market is overheated, which tends to result in a ceiling at the point where everyone thinks it is a good buy.

Therefore, if the Bull/Bear Index is tilted toward the bulls, it is used to indicate that this uptrend is about to end.

However, the Bull/Bear Index is calculated based on reports from market participants and surveys of general traders, so there is a time lag before the index is released.

Therefore, it is possible that market participants who see the Bull/Bear Index will realize that the market situation is bullish and sell off from discerning traders.

In this way, it may be a self-fulfilling prophecy.

We also see the following opinions.

Reference　ブルベア指数ほど無意味なものはない

That is all for this article on the meaning and origin of Bulls and Bears.