Bear Trap

  

Categories: Investing, Stocks, Trading

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.

Related or Semi-related Video

Finance: What is a Bear Raid?8 Views

00:00

Finance allah shmoop what is a bear raid So this

00:08

is a bear raid and this is a bear raid

00:12

And you knew you were going there Well i think

00:14

there's fraud fraud i tell you Well i think their

00:18

product just doesn't mean anything anymore Well i think that

00:23

with all those risk they're just trade me in it

00:25

too high a multiple Isn't the government going to regulate

00:29

them I thought that was a union coming in there

00:32

What are these people doing Are they rationally commenting on

00:36

honest things they actually believe are elements of the stock

00:40

No not at all In fact all of them shorted

00:43

the stock it's sixty bucks a share making the bet

00:46

that the stock would go down only now courtesy of

00:50

the wall street genius journalists being manipulated at the new

00:53

socialist times the group is spreading lies trickery and deceit

00:57

about stock prices Manipulating the market hoping to profit from

01:01

all the negative sentiment they've poured out there into the

01:05

ether making already nervous investors very nervous And it was

01:09

easy to get the journalist cooperate because well they hate

01:12

rich people Right All right Well if they covered it

01:14

thirty five that is unwound They're short position which started

01:18

at sixty bucks a share Well they'd have made twenty

01:21

five dollars a share in profits and that's totally illegal

01:25

Incidentally so is the other kind of bear raid but 00:01:29.315 --> [endTime] that we're not going there today Oh my

Up Next

Finance: What's the Difference Between Bear and Bull?
159 Views

What is the difference between Bear and Bull? Bear and Bull are two different ways to describe the market. If there is a bear market, investors are...

Finance: What is a Bear Hug?
7 Views

What is a Bear Hug? A bear hug happens when one company buys shares of another company at a price that is a lot higher than what the shares are tra...

Find other enlightening terms in Shmoop Finance Genius Bar(f)