Note: Market trading involves staggering amounts of risk. This article is intended for entertainment purposes only and is not to be taken as advice for what to do with your money! There are risks in market trading that you must be aware of before you ever enter any market and this article will not go into all of those risks. Inform yourself before spending any money on investments or market trading and never invest more than you can afford to lose!
So, I talked about Bulls and Bears in the previous article and you may be asking yourself, “Alright, so how do either one score?”, and even if you’re not asking that, I have an answer for you. The Bulls score by buying Bitcoin and the Bears score by selling it. The more buyers, the higher the price of Bitcoin goes, the more sellers the lower it goes. The things that influence why people buy and sell are as myriad as the types of markets that are out there, and something we will go into more in a later article, but for now you’ll be picking a team. Here’s the thing about picking a team, though, you’ll be playing both sides. When you buy you’re making Bullish moves and when you sell you’re making Bearish moves. It’s okay, though, just because you’re selling doesn’t mean you’re not a Bull and just because you’re buying doesn’t make you not a Bear.
What you believe the market is going to do is what makes you one or the other. We’ll use our market snapshot from the previous post as an example:
Let’s pretend that it’s May 5th, 11:59PM–just before the May 6th, 12AM-1AM candlestick. We know, in hindsight, that the price is about to shoot up over $10, but let’s go back in time to a place where we didn’t know that. Actually, why don’t I make it easier for you?
At this point in the game the playing field is pretty even, neither the Bears or Bulls are making the price break out in any one direction, and they haven’t in 16 hours. Do you believe the price is going to go up or down? That’s how you choose your team. The Bulls, in anticipation of the price going up are establishing what is called a ‘long position‘. In essence they are buying Bitcoin in hopes that the price will go higher at which point they can sell their Bitcoin and walk away with any profit. The Bears are setting up a ‘short position‘, betting against the price of Bitcoin going up and making their money when it goes down.
Now, it’s important to note that the Bulls and Bears aren’t the only players, but they are the only players making any real profit. There are two more; the Chickens and the Pigs. A Chicken is someone who enters the market and is afraid of it moving any direction or the other. Either through indecision or lack of information, the Chicken doesn’t make moves in the market enough to walk away with any real profits. Then, there’s the Pigs. Pigs get slaughtered, entering a market without doing their research or fully understanding the risks of the game, Pigs give their money to the market and walk away with nothing. The Bulls and Bears love Chickens and Pigs because, more often than not, they’re simply giving their money to the market which the Bulls and Bears can snatch up. If you can’t develop a Bullish or Bearish strategy within whatever market you’re choosing to play, through proper research, patience, and a deep understanding of the risks, you’re at best a Chicken and at worst a Pig.
In our next article we’ll discuss patterns and candlesticks. As always, check out some of our great Casino’s in case you’re for a less stressful, and much more entertaining, way of making some profit!