What is bear trap
A bear trap is a deceptive market phenomenon that misleads investors into believing that a financial asset is about to decline significantly. This situation typically arises after a strong upward trend, where the price movement appears to signal a reversal. As a result, traders may initiate short positions, anticipating further drops.
However, the anticipated decline is short-lived, leading to a sudden price surge that traps these investors in losing positions. Understanding what a bear trap is is essential for anyone involved in trading across various markets, including stocks, cryptocurrencies, and even niche areas like golf and network marketing.
In golf terminology, a “bear trap” refers to a challenging section of a course designed to test a player’s skill and strategy. These areas often feature difficult terrain, strategic bunkers, or complex layouts that can dramatically impact a player’s performance.