Topic: FREE Bull & Bear Traps Indicator
I have been trading 4 strategies only since the last 4 years. One of them are Bull & Bear Traps. Please read this article first. Further below I will describe how Bull & Bear Traps occur in the market. In-depth strategies about how to trade Bull & Bear Traps are on my website for free as well and you can download my custom indicator for FREE also. So lets dive in.
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.
THE BASE -WHAT HAPPENS- (see full explanation on my website, with pictures)!!!
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.
You will not need it, but without hours of practicing it would probably still be really hard for you to decide if the chart in front of you really shows a bull or bear trap. I developed a FREE indicator which shows you the traps in realtime. It does not re- or backpaint.
Please read the in-depth strategies of trading the traps properly here:
Download the indicator for FREE here:
Here is also a little backtest I made a while ago. Keep in mind. This is NOT a holy grail. EURUSD really had a good run at this time: