Bull Trap
Categories: Trading, Banking, Managed Funds, Stocks
Just like being caught in a mousetrap, a bull trap happens when the market appears to be signaling that a downward trend for a particular stock is reversing and is now headed for the sky. Seeing an upward trend, investors jump on the bandwagon (like New England Patriot fans) and purchase the stock, only to find that the stock quickly reverses direction and continues to decline.
Like...bullish (false) sentiment has trapped investors hoping, believing, praying that a stock is going up up up...only to find that it ain't.
Early warning signs often include things like the volume starting to decrease (get out as quickly as possible). You can also issue a “stop-loss” order to automatically sell at a particular price, so that if you are wounded, the holes in your leg actually heal.
Related or Semi-related Video
Finance: What's the Difference Between B...159 Views
Finance a la shmoop what's the difference between bear and bull? bear
pessimistic bad growly things coming Negative Nancy boo bear...Bull [Bear walking into water]
awesomesauce life's good you take it by the you know horns alright we're gonna
apply bear and bull to markets here but they apply to a whole lot of things and
a bear market is actually technical nomenclature that refers to sustained or [Bear market definition on 100 dollar bill]
prolonged periods of time where stock prices generally just fall...three
four five six seven eight quarters where the market craps the bed down down down
the bear market pattern is different from just a correction when the market
takes just a short term dump and then well you know quickly recovers yeah like [Bear market graph]
it has a bad quarter or two and then starts climbing again well that's not
the big bad bear that's just a correction a bull market is just the
opposite it goes up up up like this guy in his balloon-powered house and that's [House with balloons travels up a stock value graph]
it both are dangerous in the wild but on Wall Street huh you just have to watch
out for the Bears [Bear chasing a woman]