Trading price traps
Price trap is one of most rewarding price setup to trade..it is
most repetitive pattern for price action traders
What is trap
Traps occur often and the name is a very good descriptor of what actually takes place. There are many reasons why traps occur, and there are several
different ways to approach them. What actually occurs with these traps is that multiple traders will enter a trade at the same location, which is usually a tick above or below a previous bar/candle or key price level. However, immediately upon ticking higher or lower, the market will instantly reverse, trapping those traders who entered on the tick higher or lower on the wrong side of the trade. When the trapped traders realize that they have been duped, they begin exiting on the break of the previous bar. This mass exodus adds fuel to the move and very quickly, the market will surge forward for a couple of points or more.
Trading the trap
When you see a trap setting up, you want to have a market “stop” order in place exactly where the trapped traders will be exiting. As the duped traders all begin to exit, your order will be executed and you will be swept into the tradewith the exiting orders and the move will generally be swift and sudden
Today Nifty future with bull traps