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What is Bear trap?

what is bear trap

The situation facing short sellers of a security or index when a bear market reverses its trend and becomes bullish. The assets continue to sell in anticipation of further declines in prices, but when the price reverses direction and starts to rise, short sellers are forced to close their short positions at higher prices, meaning that will have big losses.

The unexpected trend reversal traps short positions hence the term “bear term”.

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