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Web Trader MT5
B
Basis point
A unit of measurement for interest rates and bond yields, equal to 0.01%.
Basket
A group of securities or assets that are traded together.
Bear
Someone who thinks prices are going down. The opposite of a bull. Where the term comes from is debated, but the most popular story is that bears push down with their paws when they attack, while bulls toss upward with their horns. Whether the etymology is real or invented after the fact, it’s stuck.
A bear can be a person (“the firm’s chief strategist is bearish on tech”), a position (“I’m short, I’m bearish here”), or a market environment (“we entered a bear market in late 2021”). Same word, different scopes.
Worth distinguishing structural bears from cyclical ones. A cyclical bear thinks the next six months are going to be ugly but the long-run case is intact. A structural bear thinks the entire premise is wrong: the company is going bust, the country is in decline, the bubble was a bubble. The two trade very differently. Cyclical bears use options and short-dated shorts. Structural bears patiently build positions and wait for years.
Example: Michael Burry, made famous by The Big Short, was a structural bear on US mortgage-backed securities from 2005 onward. He held the position through years of mark-to-market losses while the bubble kept inflating, and was ultimately vindicated when the housing market collapsed in 2007–08.
Bear Flag
A continuation pattern in a downtrend. The chart drops sharply (the “flagpole”), then trades sideways or slightly upward in a tight range (the “flag”), and then resumes falling. Technical traders read the flag as a pause where short-sellers take profits and weak hands try to call a bottom, before the dominant trend reasserts itself.
The shape matters. A textbook bear flag has a clean, steep flagpole, a short consolidation that slopes gently against the prevailing trend (so, slightly upward in a downtrend), and falling volume during the consolidation. Volume should pick up again on the breakdown out of the flag.
Bear flags fail more often than they work, which is true of most chart patterns honestly examined. But when they do work, they work fast, the implied move out of the flag is usually about the same length as the flagpole that preceded it. That’s the rule of thumb traders use to set targets.
Example: Bitcoin in mid-2022 traced a textbook bear flag. After dropping from around $40,000 to $30,000 in May, it consolidated between $28,000 and $32,000 for several weeks, then broke down in June toward $20,000. The breakdown’s magnitude roughly matched the prior flagpole, which is the pattern’s classic completion.
Bear market
A prolonged period of declining prices, typically marked by a 20% or more drop from recent highs, also referred to as “bearish”.
Bear Trap
A false breakdown. Price drops below an important support level, triggering bears to short and longs to sell, and then sharply reverses higher, trapping the new shorts and the panic-sellers who joined them. The trap closes when those positions are forced to cover at a loss as price climbs.
What makes bear traps psychologically nasty is that they look exactly like the start of a real breakdown until they don’t. The support level breaks, volume picks up, technical signals turn negative, sentiment shifts. Everyone who follows technical analysis sees the same thing and acts on it. Then the move reverses and all those textbook signals become liquidity for the people who were buying.
Big institutional players are sometimes accused of engineering bear traps deliberately, by absorbing forced selling at lower prices and then driving the recovery. Whether that’s coordinated or just emergent behaviour at scale doesn’t really matter for the trader on the wrong side. The losses are identical either way.
Example: Indian equities in March 2023, when the Adani Group crisis pushed the Nifty briefly below 17,000, a level many traders had flagged as critical support. Shorts piled in expecting a deeper move. The index reversed within days and rallied to fresh highs over the following months, leaving the late shorts caught.
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