List of Financial Market Terms

A bear trap is a term used to reference a period at which it appears that an upward trend of a stock has reversed, when really it hasn't. The reason it is called "bear trap" is simple...it tends to cause short traders ("Bears") to place short positions on the financial instrument thinking it will continue to go lower.  In reality, this was just a minor correction in an overall uptrend rather than a reversal, and results in the "Bears" being trapped in a position that results in them having to exit for a loss.  Hence, "Bear Trap".

This term is used frequently in an options trading system, futures trading system, day trading system, or stock trading system.

The inverse is a bull trap.

See also: moving average, bullish market sentiment, moving average convergence divergence, bearish market sentiment

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