Bear Market
An extended period of falling prices and generally negative sentiment.
Also called: bearish · bear
In plain language
A bear market is conventionally a decline of 20% or more from a major high, sustained over time rather than a single sharp drop.
Bear markets behave differently from bull markets, not just in direction. Volatility is higher, correlations rise, and rallies are sharp enough to look like reversals repeatedly.
Liquidity thins as declines accelerate, which widens spreads and increases slippage exactly when stops are most likely to trigger.
Why it matters
The same position size carries more real risk in a bear market because volatility and gap risk are both elevated. Sizing should adjust with the regime.
Common mistakes
- Repeatedly buying dips on the assumption the previous regime still applies.
- Keeping bull-market position sizes while volatility has doubled.
- Underestimating how convincing counter-trend rallies can be.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
An extended period of rising prices and generally positive sentiment.
How much and how quickly an asset’s price moves over a given period.
The decline from an account’s peak value to its lowest point before a new peak.
The hidden risk of holding several positions that tend to move together.
How easily an asset can be bought or sold without moving its price.