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Investment
Bear Trap
A false signal that the market is going to keep falling when it actually starts rising soon after.
Bear traps catch fearful sellers at the worst possible moment. They often happen after bad news is already priced in. Volume and support levels help traders spot them.
It's when the bear growls loudly and everyone runs for the exits — but then the bear turns out to be friendly and the party continues.
Real world: During a bull market the price suddenly drops sharply. Many people sell in panic thinking a crash is coming (bear trap). A few days later the price shoots higher, leaving the sellers behind.
💡 Bear traps punish people who sell in panic — the market loves to shake out the weak hands.