Today I want to discuss with you a theme very interesting: the pitfalls of market makers.
Let us begin.
How often did you come across this? She opened a position and why price went sharply against her, removing her stop loss, and as soon as her position was closed at a loss, price turned back around and was where she expected. ?
You analyzed your trades and didn’t understand what you did wrong.
Actually, it’s not your fault. You have just fallen into the trap of a market maker.
These traps are created by large players to collect the stops of small market participants, thus creating liquidity to open or close. their great positions.
How are the traps?
As a rule, traps are false level breakouts.
It is in these places that small players place their stop orders and this will be the main objective of a big player.
The first trap pattern is the classic double top pattern.
Everybody knows from the books that the second peak should be a bit lower than the first. Then the market tells us that the price no longer has the strength to make new highs and it is time to fall.
In fact, above the first peak, most traders place their stop loss and big players push the price towards them to trigger orders and gain liquidity, after which the market reverses.
The second trap situation is the trend.
The trend is our friend! Everyone remembers and knows this.
Also, everyone remembers that the trend changes when the price, in a bear market, renews the previous high.
After the new high, we think that the trend has changed, but the price suddenly falls further and the downtrend resumes again, what happened?
The big player knows that the dealers place their stop losses above the last high and that is why the price rises, thus liquidity gathers, after which the bear market continues.
How to trade?
We cannot find out the thoughts and wishes of the main players.
The average trader should analyze the chart and try to act in the direction that the market maker pushes the price.
Pay attention to false breakouts – these are strong signs.
Seeing that the price was updated to the maximum and then changed sharply, wow short, so it will operate in the same direction with a major player.
Also, remember that traps are often characterized by candles with long tails.
A long shadow will be a false breakout.
Trading traps is very difficult and at the beginning of the path you will fail.
Study the market, try to understand how a great player thinks.
When you learn, this strategy will bring you big profits.
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I’ll be happy