|Overview: Bull Trap|
|Definition||An inaccurate signal that a downtrend in a market or investment is over.|
|Related Concepts||Efficient Market HypothesisBehavioral Finance|
top » economics » finance » behavioral finance » bull trap
What is a Bull Trap?
John Spacey, updated on October 03, 2016
A bull trap is an inaccurate signal that a downtrend in a market or investment is over. When a stock has experienced a period of decline investors may sit on the sidelines waiting for the selling pressure to subside before buying in. Investors use a wide variety of signals to detect that a stock has hit its bottom and is on the rebound. For example, crossing above a 50-day moving price average is commonly touted as a bullish indicator. According to the efficient market hypothesis, stocks can follow any pattern of ups and downs and there is no magic indicator that a downtrend is over. Bull traps occur when investors initiate positions believing they see a sign a downtrend is over only to see further price declines.
Behavioral FinanceThis is the complete list of articles we have written about behavioral finance.
If you enjoyed this page, please consider bookmarking Simplicable.
Alpha vs Beta
The difference between two common investment measurements.
Regression Toward The Mean
An overview of Regression Toward The Mean.
Efficient Market HypothesisAn overview of the Efficient Market Hypothesis.
An overview of animal spirits, a theory of investing.
Financial MarketsA definition of financial market with examples.
A definition of Mr. Market, an investing theory.
A definition of organic growth with examples.
The common types of concept company.
Information CostsA definition of information costs with examples.
The definition of channel check with examples.
Economic TheoriesA list of economic theories that are particularly useful for business.
The tendency for people at high risk to buy insurance.
A list of economic positions or capabilities that allow you to outperform in a particular industry.
Knowledge WorkA definition of knowledge work with examples.
ProductionA definition of production with examples.
An overview of post-scarcity.
Economic InfrastructureThe common types of economic infrastructure.
The common types of business competition.
InefficiencyThe common types of inefficiency.
An overview of supply with common examples.
TrendingThe most popular articles on Simplicable in the past day.
New ArticlesRecent posts or updates on Simplicable. Site Map
© 2010-2023 Simplicable. All Rights Reserved. Reproduction of materials found on this site, in any form, without explicit permission is prohibited.
View credits & copyrights or citation information for this page.