How is a Bull trap formed? | Forex Factory

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How is a Bull trap formed?

  • #1
  • First Post: Nov 18, 2010 8:36pm Nov 18, 2010 8:36pm
I understand the effect of a bull trap, after having trades stuck in a couple. But how are they formed? What causes their creation?

It seems to me that a bull trap (at first glance) would require the combined efforts of a great many traders, but I seriously doubt that is the case.

I did a search for an answer using the search function but got so many that weren't associated with my question, so I'm hoping someone can provide an answer here.
  • #2
  • Nov 18, 2010 8:58pm Nov 18, 2010 8:58pm
Quoting Betting
I understand the effect of a bull trap, after having trades stuck in a couple. But how are they formed? What causes their creation?

It seems to me that a bull trap (at first glance) would require the combined efforts of a great many traders, but I seriously doubt that is the case.

I did a search for an answer using the search function but got so many that weren't associated with my question, so I'm hoping someone can provide an answer here.
You trade through a broker........ It's their market. Does there really have to be an order at a price for them to move the candle?

Inside the market, Bull/Bear traps are a way to shake out weaker players and engineer reversals/turns by feeding on the stops of the trapped players.

Often in fast markets, where larger orders are coming in, all orders close to market will be swallowed, this could result in orders above/below being filled. You will see this during ranges preceding breakouts, the market will sweep out of one side of the range, taking stops and entry orders in one direction ( a false breakout) then reversing and then feeding off the stops of the trapped entries.

fwiw.
  • #3
  • Dec 15, 2010 5:55am Dec 15, 2010 5:55am
imho..
It takes only 1 large enough trader with another opinion regarding the price to move the markets..
So a breakout can be 'false' and then counts as a trap, or may be 'true' and then counts as a real breakout!
So the whole sum of traders decides live on each breakout, then there is no way to know ahead if we are looking at a trap or a breakout
  • #4
  • Last Post: May 15, 2022 11:52am May 15, 2022 11:52am
Quoting Ocean_Wave
imho.. It takes only 1 large enough trader with another opinion regarding the price to move the markets.. So a breakout can be 'false' and then counts as a trap, or may be 'true' and then counts as a real breakout! So the whole sum of traders decides live on each breakout, then there is no way to know ahead if we are looking at a trap or a breakout
but there is a characteristic trait in the market after a trap or real breakout, and when we should only re-act on what market does, then it makes sense to pin point where was trap or where trap could happen
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