# Updated on Sunday, 16 March 2014 #
The Meaning Behind the Message: Forex Trading Wisdom for Bull and Bear Markets PDF Print E-mail
Written by Eric Milcic   
Thursday, 16 May 2013 04:11

The forex trading market can turn on a dime with a shift in weather or political winds. As such, across the decades the forex trading market has undergone its share of growing pains. Many of those growing pains have spawned short sayings that have becoming typical trading jargon. Traders new to the forex market may hear these sayings from more experienced mentors and pay them little mind until theory meets practical application. If you are considering becoming a trader or investor in the forex market, it’s wise to learn the lingo common among experienced forex traders.

Bull and Bear Markets Defined

Within the forex market, “bull market,” “bear market,” “forex” and “forex trading” are some of the most common sayings. Here are some simple definitions:

  • Forex. The term forex is simply “foreign exchange” condensed into one shorter word.
  • Forex trading. Forex trading means to trade currencies from different countries.
  • Bull market. When prices are rising for commodities, securities and currencies, the industry describes the market conditions as being a “bull market.” The term arose from the way a bull attacks its opponent by thrusting its horns upwards.
  • Bear market. When prices are falling for commodities, securities and currencies, this is described as a “bear market.” A bear will slash its paws downward to attack its opponent, thus earning the forex the description of a “bear” market when prices are falling.

Wisdom From Experienced Forex Traders

Forex traders rely on certain sayings that have almost become somewhat clichéd; nonetheless, these sayings are time-tested and sure to provide direction to both new and experienced traders.

  • “Sit on your hands when you don’t have a clue.” The meaning of this statement should be clear, yet there is a reason it is still in common use amongst forex traders. This saying reminds traders that forex trading begins and ends with market education; experience in the market is education. However, it’s better to do nothing than to risk a major loss. And sometimes you just have to wait it out.
  • “Plan your trade and trade your plan.” This statement reminds traders to always seek out more information and develop a long-term game plan before beginning a series of trades.
  • “It’s never too low to sell or too high to buy.” Experienced traders remind those new to the profession that trends trump even careful planning. It’s best to follow the market trend.
  • “Let your profits run but cut your losses short.” The seasoned forex trader reflects on the wisdom of allowing a profitable streak to continue but quickly terminating an unprofitable position.
  • “Don’t let a winning position turn into a losing one.” This saying builds on the one before it by reminding traders to monitor their profitable streaks carefully. The forex market — like life itself — can change quickly, and when this happens the inattentive trader may lose what has been gained in a heartbeat.
  • “Don’t marry a position.” Many forex industry statements begin with the word “don’t.” Here, the reminder is that a trading position is not the same as “til death do us part.” Trading positions can, should and must change if the forex trader is to stay abreast of the ever-changing forex market itself.
  • “No one ever went broke taking a profit.” Here, the wise forex mentor reminds newer traders that forex trading is not the same as gambling at the casino. Sometimes, when you are up, you want to cash out and move on. A profit is still a profit — and remembering that even the best profits can quickly turn into losses can help newer traders decide when to hang tight and when to cash in.

Building a career as a forex trader takes a lifetime of study and practical application. This exciting, dynamic field can perhaps best be summed up with the following advice, “don’t bet your house.” Forex traders, like any other participants in the greater trading marketplace, must keep one eye trained on risk and the other on reward. Only by successfully balancing risk versus reward will a forex trader succeed over the long term.

About the Author: Eric Milcic is a writer and currency analyst with http://www.forextradingzone.org/. He suggests visiting the site for further information about the forex market. Follow him on Google Plus.



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