The forex trading might be full of such terminology as ‘BearWhale’ which seems to be rather bizarre. If a BearWhale believes that the value of a currency is going to decrease, Bear Whale is a large entity in the forex market. This type of trader can shift the market massively because of the size of trades that they make.

The Terminology Explanation

To get what a Bear Whale is, let’s break down the terms “Bear” and “Whale.”

• Bear: In forex (and other financial markets) a “bear” is an individual who anticipates that the price will decline. If you’re a bear, you think prices will go down, so you might sell things to make money when prices drop.
• Whale: This term refers to the owner of a large amount of capital which he can invest. It is because whales trade in big quantities that can cause a shift in the market. In the forex market, what is known as the ‘whales’ could be big banks, hedge funds, or even individuals with quite deep pockets.

When you put these two terms together, a Bear Whale is a very influential player who is betting that a currency’s value is going to go down.

Role and Impact of a BearWhale

A Bear Whale can influence the forex market in significant ways. Here’s how:

• Influence on Market Prices: As we have seen, Bear Whales are trading in high volumes and hence, their activities lead to large swings in the price of the asset. However, because Bear Whale is characterized by its huge size, it is capable of influencing prices negatively by selling a great deal of currency. This can lead to other traders also selling their position, thus lowering the price even further. In other words, Bear Whales have the power to create bearish pressure and spiral a currency’s value downwards.
• Strategies Used by Bear Whales: Specifically, Bear Whales practice what may be called booster maneuvers. For example, they may leverage (borrow) even more money to make their trades even greater. It could also give negative information about a certain currency to the public to put pressure on the cross-selling currency. They can help make their prophecies of declining prices to be true.

Examples of BearWhale in Action

To understand how Bear Whales work let’s have a look at the example of a large hedge fund that actively engages in trading and which chooses to make a large transaction predicting the decline of the Euro. The fund soon begins to unload a very large number of Euros. Along the way, it [the Euro] drops in price causing more traders to cash out to minimize their losses. This selling spree results in more dropping of the Euro, it can even lead to a currency if the issue gets worse and worse.

Risks and Considerations

For individual traders, there are some risks and things to keep in mind when it comes to Bear Whales:

• Risks for Individual Traders: It should be noted that if you are trading and a Bear Whale starts manipulating the market in your direction it is very disastrous. They offer large trades which can significantly affect the prices of the assets and, possibly, you may have a great difficulty in exiting a losing position.
• How to Identify and Respond to Bear Whale Activity: Hence, to protect yourself, you have to be informed. Be on the lookout for large volumes of trading or any exciting news concerning the large trades. That is if you think you are dealing with a bear whale you might want to switch up your trading. Set tighter stop losses to avoid big losses and trade less when the market is very active.