Bear Trap

What is a Bear Trap?

A bear trap refers to a manipulation of stocks, commodities or other assets that make it appear as if the asset is falling in price naturally.

The traders who create or “set” the bear trap will begin selling an asset that has been in an uptrend, fooling others who aren’t aware of the bear trap into believing that the uptrend has ended for the asset.

Those who fall into the bear trap will begin selling their asset in fear that price is going to fall further. This allows those who set the trap to step in and buy the assets at a discounted price.

At the same time they stop selling themselves, and the bear trap is released, causing prices to even out, and possibly even resume their uptrend.