Bear raid

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A bear raid is a type of stock market strategy, where a trader (or group of traders) attempts to force down the price of a stock to cover a short position. The name is derived from the common use of bear or bearish in the language of market sentiment to reflect the idea that investors expect downward price movement.[1]

A bear raid can be done by spreading negative rumors about the target firm,[2] which puts downward pressure on the share price. This is typically considered a form of securities fraud. Alternatively, traders could take on large short positions themselves, with the large volume of selling ideally causing the price to fall,[3] making the strategy self-perpetuating.

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References[edit]

  1. ^ Law, Jonathan, ed. (2008). A dictionary of finance and banking. (4th ed. ed.). Oxford: Oxford University Press. ISBN 9780199229741. Retrieved 22 November 2014. 
  2. ^ Malik, Andrew; Sarna, David E.Y. (2010). History of Greed Financial Fraud from Tulip Mania to Bernie Madoff.. Hoboken: John Wiley & Sons. p. 62. ISBN 9780470877708. Retrieved 22 November 2014. 
  3. ^ Scott, David L. (2003). Wall Street words : an A to Z guide to investment terms for today's investor (3rd ed., newly revised and updated. ed.). Boston: Houghton Mifflin. p. 28. ISBN 0618176519. Retrieved 22 November 2014.