Bull Market Trading Strategy —Backtesting and Practical Example

As a stock market trader, you must have been conversant with the phrases like a bull, a bull run, and a bull market. Those are phrases used to describe buying sentiment in the market. But what actually does bull market trading strategy mean?

Bull market strategy refers to the methods and techniques employed by traders and investors to benefit from a bull market. This includes entry, exit, trade management, and risk management strategies traders use to gain the most benefit from the market during a bull run.

In this post, we take a look at some bull markets in history and at the end of the article, we look at a bull market trading strategy.

Related reading: – Are you looking for other bull market trading strategies? (We have plenty more)

What is a bull market?

A bull market refers to a market condition where the prices of assets are rising steadily. Since the prices of many assets rise and fall all the time, the term “bull market” is typically used to describe an extended period — months or even years — when the prices of securities are in a sustained uptrend. Although commonly used to describe the stock market, a bull market can also be used to describe other asset markets, such as the commodity, bond, foreign exchange, and real estate markets.

There is no standard definition for a bull market, as regards the value of price appreciation. However, in the stock market, one commonly accepted definition of a bull market is a period, lasting at least six months or more, when any of the broad market indexes, such as the S&P 500 Index or the Dow Jones Industrial Average (DJIA), rises by 20% or more, from the low of a preceding 20% decline (bear market).

For many retail and institutional traders, a simple way to identify a bull market is to use the 200-day moving average of the S&P 500 Index. When the 200-day moving average of the S&P 500 is sloping upward and the index is trading above it, the market is considered