GBPUSD - Liquidity Trap
Still looking at a trap for Liquidity on Cable going into this week.
There are some nice lows that I'm looking for failure around providing a high probability move to the upside (targeting the FTA - First Trouble Area).
Why do I trade these liquidity traps?
Reason 1 - Because when price breaks structure, the breakout traders have their pending orders (Sell/Buy Stops) activated to which the institutional players will trap by failing the break and pulling price back slightly to close above/below previous structure, invalidating the breakout traders ideas so they will either hit stop or pull out of their order due to fear or rules.
Reason 2 - Because any retail traders who are currently still holding positions usually have their stops placed beyond structure/swing points creating a mass of orders. If you're not aware if you're short the market you have to buy back your position and if you're long the market you have to sell back your position.
For both of these reasons this creates a high volume area of transactions in the market creating high liquidity. If you study what the big players do at these areas, watch your strike rate grow!
If you want to learn more about how we trade at Xclusive Trading, either message us or check out our membership plan online:
xclusivetrading-groupltd.com/membership-plans
There are some nice lows that I'm looking for failure around providing a high probability move to the upside (targeting the FTA - First Trouble Area).
Why do I trade these liquidity traps?
Reason 1 - Because when price breaks structure, the breakout traders have their pending orders (Sell/Buy Stops) activated to which the institutional players will trap by failing the break and pulling price back slightly to close above/below previous structure, invalidating the breakout traders ideas so they will either hit stop or pull out of their order due to fear or rules.
Reason 2 - Because any retail traders who are currently still holding positions usually have their stops placed beyond structure/swing points creating a mass of orders. If you're not aware if you're short the market you have to buy back your position and if you're long the market you have to sell back your position.
For both of these reasons this creates a high volume area of transactions in the market creating high liquidity. If you study what the big players do at these areas, watch your strike rate grow!
If you want to learn more about how we trade at Xclusive Trading, either message us or check out our membership plan online:
xclusivetrading-groupltd.com/membership-plans
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.