“Knowing where the trap is – that’s the first step in evading it.“… Frank Herbert, Dune
And in trading, we can take this further.
Knowing where the trap is allows you opportunity to profit as the trap is sprung.
Let’s look at a recent trap provided in the E-mini Nasdaq charts.
A fairly regular occurrence which always has me looking at the market with a high degree of suspicion.
The Trap: A significant breakout of a key level that occurs in the final minute (or seconds) BEFORE a key market timing.
Basic TA suggests that a wide-range high-volume breakout is a good bet.
But then 100% of losing traders are probably using basic TA, so you might want to actually slow down a little and think.
Because price will do all it can to deceive you.
And your initial emotional gut reaction is often wrong.
Slow down a little.
And see what is really happening here.
The emotion of a strong breakout easily locks us into a fixed-mindset – “the market is going higher”.
But the YTC Price Action Trader prepares us for two paths of interest when the market shows strength on a breakout. One that does allow for continuation. And the other that watches for failure.
There is rarely a need to rush. If there is a continuing momentum drive, you’ll see it and find a way in. But if not… if price stalls and rolls over… you might have an even better opportunity the other way as all the breakout traders are forced out of their position.
And even more so when the breakout occurs in the seconds BEFORE a key timing; which time and again provides a beautiful opportunity for a trap.
Knowing where the trap is – that’s the first step in evading it.
And even better – profiting from it.
One of the places I love to see traps develop is a significant breakout of a key level, in the final minute (or seconds) BEFORE a key market timing.
Keep an eye out for similar opportunity in your markets.
Related Articles: And another key market timing that can provide great traps…
- Traps Just Before RTH Open – 1
- Traps Just Before RTH Open – 2
- Traps Just Before RTH Open – 3
- Traps Just Before RTH Open – 4
- Traps Just Before RTH Open – 5