The market is an arena of constant struggle, where the forces of bulls and bears rage, and every participant in this battle dreams of being on the winning side. However, not everyone understands that bulls can be cunning: as soon as the market rises to its peak, they quickly 'change tires' to bears, seizing new opportunities. And what remains for others? Hamsters – this is the investment slang term for inexperienced traders who succumb to panic or excitement – often find themselves at the peak of the market at the most inopportune moment and become a kind of 'victim' of this world.
Bull run: a fairy tale that ends quickly
First, let's understand what a bull run is. A bull run is a short-term period when asset prices are rapidly rising, surrounded by unprecedented excitement and confidence in further growth. It seems that assets are about to soar into space, and everyone is ready to invest right now, before it's too late. This is a period of euphoria when everyone becomes a bull and sees only green charts on their screens. It's important to understand that a bull run is nothing more than a temporary phenomenon, and it is always followed by the opposite side – a correction, and sometimes a full-fledged bear market.
Cunning bulls: 'Changing tires in mid-air'
What distinguishes experienced investors from beginners? They know that the market is cyclical and a bull run will end sooner or later. Moreover, cunning bulls have a strategy – they don't just enter the market when it starts to rise, but also plan in advance how and when they will exit. As soon as prices reach a level where the market starts to 'overheat', cunning bulls quietly start taking profits while the crowd is still engaged in the upward game. Then they turn into bears, betting on a decline and preparing to catch the wave of decrease.
Who will reach the peak of the market?
At the peak of the market, the most inexperienced often find themselves – the very hamsters. Under the influence of emotions and the fear of 'missing out' on profits, they start buying assets at the highest levels, not realizing they are literally stepping on rakes. They think that the rise will last forever, because just yesterday the prices were lower! But instead of new profits, they face a harsh reality – the market has turned, and their assets are rapidly losing value.
How to protect yourself from being a sucker?
1. Research the market. Don't give in to emotions – study the charts, history, and cycles of the market.
2. Plan your exit. Don't enter the market just because everyone around is buying. Think through your exit strategy and stick to it.
3. Don't be afraid to stay out of the market. Successful investors understand that sometimes the best move is to make no move.
So, the world of the market is not easy, but by knowing the basic rules of the game, you can avoid common mistakes. Don't fall into the trap of emotions, follow your strategy, and try not to be among those who will be left at the peak of the market at the most inopportune moment!