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A bear market in securities trading is a declining market. Typically, it refers to a decline that is significant and prolonged, and there is an overall pessimistic sentiment among traders and investors, leading to a further downward trend in prices . A bear market is characterised by falling prices, high levels of volatility, and low trading volumes. The reverse of a bear market is a bull market.
Bear markets last for varying lengths of time. This can range from several months to several years, depending on the underlying economic indicators. These indicators include unemployment numbers, corporate earnings, and consumer confidence.
During a bear market, traders and investors can still find opportunities to mitigate losses and potentially profit from downward price movements. Some strategies traders can use include short-selling, defensive investing, and hedging.
Short selling: Traders sell stocks or other assets they do not own in hopes of buying them back at a lower price in the future. They often borrow these assets from brokers and securities lenders and return them after short selling.
Defensive investing: Traders use defensive assets, such as bonds, gold, and defensive stocks, to protect against market volatility during a bear market. The chosen assets are generally less volatile, providing a source of stability to limit losses and generate profit from downtrends in the market.
Hedging: Traders use hedging strategies to protect against downside risk during a bear market. For example, they can invest in options contracts to protect against potential losses on existing long positions or take a short position on an asset that is negatively correlated to their portfolio.
ADSS offers a range of global markets for traders, with CFD opportunities in indices, commodities, forex, equities and more. We also feature tutorials, how-to guides, and weekly webinars to help you navigate the financial markets and find better trading opportunities. You can start trading and investing online by opening a live trading or demo trading account.
Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.
ADS Securities LLC (“ADSS”) is authorised and regulated by the Securities and Commodities Authority (“SCA”) in the United Arab Emirates as a trading broker for Over the Counter (“OTC”) Derivatives contracts and foreign exchange spot markets. ADSS is a limited liability company incorporated under United Arab Emirates law. The company is registered with the Department of Economic Development of Abu Dhabi (No. 1190047) and has its principal place of business at 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.
The information presented is not directed at residents of any particular country outside the United Arab Emirates and is not intended for distribution to, or use by, any person in any country where the distribution or use is contrary to local law or regulation.
ADSS is an execution only service provider and does not provide advice. ADSS may publish general market commentary from time to time. Where it does, the material published does not constitute advice, or a solicitation, or a recommendation to a transaction in any financial instrument. ADSS accepts no responsibility for any use of the content presented and any consequences of that use. No representation or warranty is given as to the completeness of this information. Anyone acting on the information provided does so at their own risk.
