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bear trap

bear trap definition - finance
A situation in which a bear market (a downward-moving market) changes directions and prices rise. Bearish investors who expected the market to continue declining will continue selling short (selling what they donÂ’t own). Eventually they are forced to buy their investments back at a higher price in order to avoid further losses. Thus, the bears are caught in a trap.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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