Bear Trap

A bear trap is a false signal that makes a stock look like it's falling, tricking investors into selling—only to watch the price bounce back up. You'll hear traders talk about this when analyzing price charts and market reversals, because spotting fake breakdowns helps you avoid panic-selling at the worst time. The name comes from the idea that bears (investors betting on price drops) get caught in a trap. For example, if TechCorp stock drops 8% in an hour and looks doomed, many nervous investors bail out—but then positive news hits and the stock rallies 15%, leaving those sellers stuck with losses. Bear traps happen because sudden dips sometimes shake out fearful traders before the real buyers step in. Learning to spot them takes practice, but it's worth the effort.