Hi traders,
Not been an actual member since now, but stumbled across earnforex hundreds of times during my trading journey. I hope this quick article helps some people to become profitable. First to say, this style of trading is not for everyone, because you need a lot of patience and a lot of discipline.
I have been trading now since 2009 and tried all crappy systems, EAs, blow accounts. Since 4 years I try to make sense of what is going on behind the curtains of the market ruled by the big players. And since then I have been trading Bull & Bear Traps. So, let´s begin.
Do you remember how often it happened where a trade looked so obvious to you but immediately reversed? Hitting your stop loss? But you were so sure about your trade and the direction.
A bull trap occurs when traders take a long position and then have price reverse and move lower with huge momentum.and this pattern often follows a very similar rhythm of luring traders into “obvious” long trades, followed by a sudden move against them. Bull traps often happen around previous highs where it looks as if the price is continuing the rally.
Especially amateur traders often tend to enter at that point, thinking the ongoing trend will continue in their favor. When price then reverses, they hold on to their positions until their stops are hit or exit the position. This behaviour brings even more momentum into the reversal.This pattern is caused most likely by market makers or the so called smart money. They trap the majority of the herd of retail/amateur traders and eating up their positions.
If you know how to trade these traps and follow the smart money, you will trade setups with a high probability and a huge risk/reward ratio. Before we jump right into the exact strategies, let us take a look at the orderflow and the thought process behind a bull trap.
01.THE BASE
1. Long up-trend. Higher Highs and higher lows. Most retail traders get greedy and jump in late. Buying the trend at the pullbacks. The smart money is already accumilating their short position.
2. Break of major resistance and the recent highs. More buyers come into the market. The buyers see profits immediately. Thinking the up-trend will continue. and give them a feeling of security and convidence in their positions.
3. Here we go. Price reverses to the downside. People in disbelieve hold on to their trades that are suddenly turning into a loss. Others add to their loss, hoping to average down. The professionals are the ones who are aggressively selling and the trapped amateurs are buying, hoping that price turns again.
04. Price rallies further and the trapped long traders are now facing their losses. Most are forced out of their long trades which means that they have to sell which accelerates the rally. Bull and Bear Traps can show you the difference between professional and retail/amateur traders and why the smart money usually wins. So the question is. How to recognize these setups and how to trade them.
02. THE INDICATOR
That´s the basic anatomy of a bull trap. Vice versa this happens to the opposite site.
So, it took me and my programmer more than 6 month to develop an indicator that detects these patterns.
I´m not saying this is a holy grail indicator and it probably misses a lot of Bull & Bear Traps in between, but it also detects patterns quite well. Here is a little backtest i recorded a while ago:
You can download the indicator for FREE here:
https://the-tradersedge.com/bullbeartraps-strategy/
Please make sure to read the 2 strategy scenarios completely to trade it properly:
https://the-tradersedge.com/bullbeartraps-trendlines/
https://the-tradersedge.com/bullbeartraps-steeptrend/
If you want to know more about my trading style, please feel free to read this article as well:
https://the-tradersedge.com/smart-money/
HAPPY TRADING!!!
Not been an actual member since now, but stumbled across earnforex hundreds of times during my trading journey. I hope this quick article helps some people to become profitable. First to say, this style of trading is not for everyone, because you need a lot of patience and a lot of discipline.
I have been trading now since 2009 and tried all crappy systems, EAs, blow accounts. Since 4 years I try to make sense of what is going on behind the curtains of the market ruled by the big players. And since then I have been trading Bull & Bear Traps. So, let´s begin.
Do you remember how often it happened where a trade looked so obvious to you but immediately reversed? Hitting your stop loss? But you were so sure about your trade and the direction.
A bull trap occurs when traders take a long position and then have price reverse and move lower with huge momentum.and this pattern often follows a very similar rhythm of luring traders into “obvious” long trades, followed by a sudden move against them. Bull traps often happen around previous highs where it looks as if the price is continuing the rally.
Especially amateur traders often tend to enter at that point, thinking the ongoing trend will continue in their favor. When price then reverses, they hold on to their positions until their stops are hit or exit the position. This behaviour brings even more momentum into the reversal.This pattern is caused most likely by market makers or the so called smart money. They trap the majority of the herd of retail/amateur traders and eating up their positions.
If you know how to trade these traps and follow the smart money, you will trade setups with a high probability and a huge risk/reward ratio. Before we jump right into the exact strategies, let us take a look at the orderflow and the thought process behind a bull trap.
01.THE BASE
1. Long up-trend. Higher Highs and higher lows. Most retail traders get greedy and jump in late. Buying the trend at the pullbacks. The smart money is already accumilating their short position.
2. Break of major resistance and the recent highs. More buyers come into the market. The buyers see profits immediately. Thinking the up-trend will continue. and give them a feeling of security and convidence in their positions.
3. Here we go. Price reverses to the downside. People in disbelieve hold on to their trades that are suddenly turning into a loss. Others add to their loss, hoping to average down. The professionals are the ones who are aggressively selling and the trapped amateurs are buying, hoping that price turns again.
04. Price rallies further and the trapped long traders are now facing their losses. Most are forced out of their long trades which means that they have to sell which accelerates the rally. Bull and Bear Traps can show you the difference between professional and retail/amateur traders and why the smart money usually wins. So the question is. How to recognize these setups and how to trade them.
02. THE INDICATOR
That´s the basic anatomy of a bull trap. Vice versa this happens to the opposite site.
So, it took me and my programmer more than 6 month to develop an indicator that detects these patterns.
I´m not saying this is a holy grail indicator and it probably misses a lot of Bull & Bear Traps in between, but it also detects patterns quite well. Here is a little backtest i recorded a while ago:
You can download the indicator for FREE here:
https://the-tradersedge.com/bullbeartraps-strategy/
Please make sure to read the 2 strategy scenarios completely to trade it properly:
https://the-tradersedge.com/bullbeartraps-trendlines/
https://the-tradersedge.com/bullbeartraps-steeptrend/
If you want to know more about my trading style, please feel free to read this article as well:
https://the-tradersedge.com/smart-money/
HAPPY TRADING!!!
