Beginner 3 min read
Bull market vs. bear market
Higher highs vs. lower lows. Knowing which regime you're in is the single most valuable filter.
A bull market is a structure of higher highs and higher lows — every pullback is bought before the prior low. A bear market is the inverse: lower highs, lower lows, every rally sold before the prior high.
Most strategies work in one regime and lose money in the other. Trend-following breakout systems get chopped to pieces in a range; mean-reversion systems get run over in a strong trend. Identifying the regime before picking your strategy is the highest-leverage decision you make all week.