# Bull vs Bear Market: The 20% Rule and Corrections

> A bear market is a decline period usually defined as a broad index falling about 20% or more; a pullback of roughly 10% is a correction. FINRA gives no numeric threshold for a bull market.

Last updated: 2026-10-22 · https://www.nx24.ai/en/rehber/boga-ayi-piyasasi-nedir

## What is a bear market?

A bear market is a period of falling prices and pessimistic sentiment. The Investor.gov glossary says it generally occurs when a broad market index falls 20% or more over at least a two-month period [1]. FINRA likewise gives a drop of about 20% in a broad index as the yardstick [2].

## What is a bull market?

A bull market is a period of marked, sustained price gains. FINRA defines the term as the opposite of a bear market, a large rise in prices, and gives no numeric threshold for it [2]. Some analysts apply the 20% logic to rallies as well, but that is a convention that grew out of usage, not an official definition.

## Correction vs bear market

According to FINRA, a correction is a reversal of at least 10% before prices resume their earlier trend; the term can technically describe a rise or a fall but is mostly used for a drop [2]. In common usage a decline of roughly 10% is a correction and a decline of 20% or more is a bear market.

## Reading direction with moving averages

Many investors read the trend against the 50- and 200-day moving averages. According to StockCharts ChartSchool, the 50-day average is a popular reference for the medium-term trend and the 200-day for the long-term trend, and the two are often used together [3]. Price above both is read as an uptrend and below both as a downtrend; in between, the phase may be called a 'correction' or 'recovery'.

## Markets are not always in the same phase

Equities, crypto assets, oil, gold and currencies can be in different phases at the same time; one may be in a long-term uptrend while another is in a downtrend. Asking 'is the market bullish or bearish?' per asset class gives a more accurate picture than a single answer.

## Limits

Definitions are not exact: the yardstick (index, duration, percentage) varies by source. Moving averages are based on past prices and lag. This page is educational, not investment advice.

## Frequently asked questions

**At what percentage decline does a bear market begin?**

FINRA and Investor.gov give a drop of about 20% or more in a broad index as the yardstick; Investor.gov adds that it happens over at least a two-month period [1] [2].

**Is there a percentage threshold for a bull market?**

FINRA defines a bull market as the opposite of a bear market, a large rise in prices, and gives no numeric threshold; percentages in use are conventions [2].

**What is a correction?**

According to FINRA, a correction is a reversal of at least 10% before prices resume their earlier trend [2].

**Why is the 200-day average watched?**

According to StockCharts ChartSchool, the 200-day average is a widely used reference for the long-term trend and is often cited as a support or resistance level [3].

## Sources

1. [Bear Market (Glossary)](https://www.investor.gov/introduction-investing/investing-basics/glossary/bear-market). Investor.gov (U.S. SEC Office of Investor Education and Advocacy). Accessed: 2026-10-22.
2. [Key Terms for Tough Times: The Vocabulary of Stressed Markets](https://www.finra.org/investors/insights/key-terms-tough-times-vocabulary-stressed-markets). FINRA, 2025. Accessed: 2026-10-22.
3. [Moving Averages - Simple and Exponential](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-overlays/moving-averages-simple-and-exponential). StockCharts ChartSchool. Accessed: 2026-10-22.

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