Curious about what bull market and bear market really mean? You first need to understand how economic cycles affect the stock market. Bulls are people who believe that all is right with the world and the stock market is heading for an increase. They definitely think the economy is expanding. Bears are people who believe the economy is heading for a downturn, and stocks will either stagnate or go down. A bull market is a market in which a majority of stocks are increasing in value, and a bear market is a market in which the majority of stocks are decreasing in value. Bears definitely believe the economy is either in a recession or headed that way.

Regardless of whether the bulls or the bears are right, you can make money as a trader. The key: Identify the way the market is headed and then buy or sell into that trend. During a bear market, traders make their money by selling short or by taking advantage of falling prices. Traders sell short by borrowing stock from their broker and then selling it with the hope of making a profit when the price falls.

Even during a bear market, some stocks offer opportunities for traders to make money, including oil and gas stocks and real estate investment trusts (REITs). Petroleum stocks and REITs pay higher dividends and, therefore, are most attractive when the rest of the market is falling or showing no growth potential. During a bull market, riding a stock through recovery but getting out before a fall is key.