In the Stock Market, What is a Bear Trap?
The creation of a bear trap involves the careful planning and execution of a set of circumstances in which there is sense of an impending short term fall in the price of a given security that will be followed by a long term upswing in the price. Essentially, the bear trap is designed to encourage investors to buy at a higher price, with the anticipation that during the upswing the unit price will exceed the rate that was paid for the shares. A bear market in and of itself is an environment in which there is a high amount of pessimism about the market performance of selected securities. There is an expectation that the market is going to fall, and that is going to lead to a situation where investors will sell short in order to cover the anticipation of loss. Activity in this sort of bearish market means the opportunities to purchase additional shares can be quite good. However, the risk is that the market value will remain constant or continue to fall. When that situation occurs, the in
