Bear Trap

A bear trap is a false signal that a stock's price is falling, which tricks investors into selling, only to watch the price bounce back up. You'll hear this term when analyzing price charts and market reversals—it matters because falling for one can lock in losses you didn't need to take. The trap happens when a stock dips below a key support level (a price point where it typically bounces), spooking sellers into panic-selling, but then buyers step in and push the price back up. For example, if TechCorp stock drops below $50 and triggers a wave of selling, but then rallies back to $55, those who sold at $48 got trapped. It's the opposite of a bull trap, where a false rally tricks you into buying before a drop.