What Does Bullish Mean in Stock Trading?

by Charles Grant
The bull and bear represent two different outlooks when it comes to investing.

In stock trading, when someone is "bullish" it means she is optimistic about a particular investment or the stock market as a whole and thinks they will increase in value in the near future. The opposite of bullish is "bearish", or thinking that an investment will decrease in value. In addition to an individual being bullish or bearish, a stock market as a whole can also be described as a bull or bear market.

Bullish Investors

A bullish investor thinks stock prices are going up

An investor is bullish if he has a lot of confidence in a particular stock or the stock market in general. A bullish investor thinks that stock prices are going to go up in the near future. As a rule, a bullish investor will buy stocks as opposed to selling them. Since there are many different stocks and stock exchanges, an investor can be bullish about any single investment or a combination of investments. For example, you could be bullish about a specific company but bearish about the stock market as a whole. Or you could be bullish about the market but bearish about a particular group of companies.

Bull Market

Stock prices could look like this graph in a bull market.

A bull market is when the stock market is consistently going up. This is due to an overall bullish attitude, which leads to more people buying stocks, which in turn causes the prices of stocks to increase. An example of a bull market is the U.S. stock market in the mid to late 1990s, when stocks prices were increasing at a rapid rate. Contributing factors to this particular bull market were the widespread enthusiasm for tech stocks as well as a strong economy.

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Bullish Day Trading

Day traders make many trades to try and make a profit

A day trader is someone who trades a high volume of stocks in the short term for profit. If a day trader is bullish on a stock she is likely to purchase that stock on the theory that it will rise in price so she can sell it later in the day or week for a profit. In a bull market a day trader is much more likely to buy and sell stocks at a high volume, as more stocks are going up more quickly.

Bullish Institutional Investing

Institutional investors are those that invest large amounts of money on behalf of large institutions such as pensions or insurance companies. If institutional investors are bullish on a particular stock or market sector, they are likely to hold onto that investment for longer than day traders. Since institutional investors are responsible for such a large volume of investments, their movements can have an effect on the stock market itself. In a bull market institutional investors are likely to buy stocks, helping drive the market higher.

About the Author

Based in Chicago, Charles Grant has been writing about money since 2005. He also serves as a financial manager and consultant. Grant received his Bachelor of Science in finance from the University of Illinois at Chicago.

Photo Credits

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