What It Means
A bear market is a sustained fall in prices, conventionally marked by a drop of 20% or more from a recent high, accompanied by widespread pessimism. It's distinct from a routine correction (a 10-ish% dip that can happen within an ongoing uptrend) — a bear market implies the broader trend itself has turned down.
How It Works
Bear markets typically move in waves rather than a straight line down: a sharp fall, a relief rally that draws in buyers hoping the worst is over, then another leg lower. That pattern is exactly why bear-market rallies are dangerous for traders who mistake a bounce for a reversal. Falling trading volumes on rallies and rising volumes on declines are a common tell that the downtrend is still intact.
Warning
Trying to "catch the bottom" during a bear market by buying every dip is one of the most common ways traders lose money — bear-market rallies often fail and resume lower.