Crypto Analyst

in cryptocurrency •  last year 

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Bull trap occurs when traders/investors go long and take on a position when a coin is taking off. This counter move produces a trap and often leads to sharp sell offs. If you haven't encountered a bull trap, then you don't know about pain.

The reason bull traps are tough for new traders/investors is the discipline and emotional aspect of the trade. Think about it for a second. For most new traders, they will enter a position with some level of uncertainty because they aren't sure about taking the position in the first place (doesn't have any trading plan). They will open their "support group" , group chat and other social media account to check how the market is doing. Eventually they saw post "OMG the market is starting to recover again YEHEY!", then they will check the chart and will witness a rally happening. They will mindlessly press the buy button and eventually get bull trapped since the price was immediately dumped after the short rally.

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