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By Staff Reporters
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What Is a Bull Trap?
A bull trap, according to James Chen, is a false signal, referring to a declining trend in a stock, index, or other security that reverses after a convincing rally and breaks a prior support level. The move “traps” traders or investors that acted on the buy signal and generates losses on resulting long positions. A bull trap may also refer to a whipsaw pattern. Read: “Bull Trap.”
What is a Bear Trap
The opposite of a bull trap is a bear trap, which occurs when sellers fail to press a decline below a breakdown level.
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Filed under: "Ask-an-Advisor", Accounting, Ethics, Experts Invited, Funding Basics, Glossary Terms, Investing, Taxation | Tagged: bear trap, bears, bull trap, bulls, James Chen, stock market, whipsaw |
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