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A myth. Cattle can't tell red from green. They charge the movement.
Where it came from
In the bullring the matador waves a red cloth, the muleta, and the bull charges it. It was easy to put two and two together.
What’s actually true
Cattle are dichromats: like people with red-green colour blindness, they lack the cones that tell red apart. In tests bulls charged a moving cloth whatever its colour, and ignored a still red one.
The bull is provoked by the flapping cloth and by everything that came before it in the ring. The muleta is red largely by tradition, and because it hides bloodstains.
Further reading
- Wikipedia: Bullfighting (Colour and the muleta)