How To Know If You Are Been Caught By A Bull Or Bear Trap?

What is Bull Trap? A bull trap means that during a period of falling prices—a bearish period—the market abruptly changes direction and begins to move bullishly. However, this shift doesn’t last.

What is Bear Trap? During an up-trending, bullish market a reversal occurs, this time to a bearish trend. Bear traps can lead investors to believe that markets will continue to fall, and in turn, take a short position and sell assets. As the trend reverses again, back to its bullish movement, traders are forced to buy back at a loss or abandon trading until the market falls enough to buy back at a lower price.

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