Bear Trap

A bear trap is, well, a trap relating to a bear (market). It's what happens when the price of an investment looks like it's dropping, so investors rush in, thinking they can profit on the drop...but then, it doesn't actually drop.

Bear investors often use the short strategy, meaning they buy low and sell high, sometimes the same stock repeatedly. As you can imagine, these bargain hunters thrive on a bottoming out market, so they could be quick to see potential in a lessening share price, and be quickly snared in the bear trap.