TRADING PSYCHOLOGY AND FEATURED MAKER MAKER TRAPS
What are the most common trading demons?
- FOMO (FEAR OF MISSING OUT)
- HESITATION TO PULL TRIGGER DUE TO FEAR
- REVENGE TRADING
- OVER CONFIDENCE
- IGNORANCE-DID NOT BACKTEST STRATEGY ENOUGH
- STRATEGY HOPPING
- LACK OF TRADING PLAN AND PROPER RISK MANAGMENT
Trading is actually really simple….its just the trading demons that people can’t seem to conquer and face. Market Makers appeal to the inner demons and trading errors we all go through as a natural human reaction to uncertainty. A true trader is a ‘Self-Manager’ of risk, emotion and psychology.
The goal is to develop a plan that will protect your account from your trading demons and after time they lose their strength; allowing you to be comfortable with Risk. This is such a strange Career and people are very scared of the uncertainty in trading. But in the process i think we all realise that trading ultimately leads you to the mastery of self.
Risk is not something to be feared…its something to be managed…losses are inevitable.. manage the losses, perfect you edge and the wins naturally grow.
Most successful traders meditate, get adequate sleep, talk to their subconscious… eat the right foods and continue to perfect the aspects of themselves that initially have nothing to do with trading.
There is a known wise saying that whatever you wish for in life….one should wish to be BALANCED. Because once one balances the mind, body and soul than one can achieve anything in this life. This blog is not one to externalize the issue because overtime you realize that the market makers repeat themselves over and over…..bringing a predictable edge to the market. This predictable edge in the market is the SPELL casted on the collective mind of the trading world.
Seldomly traders spend time on their inner world to seek for higher intuitions to guide them to the best setups. Instead of perfecting one strategy or “backtested edge” traders spend way too much time strategy hopping…jumping from signal service to signal service. Wasting more money on education…all the while digging themselves deeper into the hole because they experienced a series of losses from that particular strategy. Its important to understand that this can be experienced in ALL strategies in Forex. Especially on the road to mastery…
The Financial market is the biggest mind game on Earth and no matter how much you backtest an edge you must be adaptive to different market conditions and changes. Your favorite “Edge” has many different variations… Trading setups are much like human beings…they all look similar but yet are all different”.
TOP DOWN ANALYSIS
A CRITICAL ANALYSIS OF THE AUDCAD SELLER TRAP EXECUTED LONDON SESSION LIVE
Above is a classic example of clear Market Maker Manipulation; using various psychological levels and structures we were able to determine what most retail traders would be doing. You can see on the Daily Chart there was an obvious resistance zone which increases ‘order flow’ into the market based on the pattern and behavior around this zone. Just think of order flow as an area where mass amounts of buys and sells will take place based on human expectation of what they think will happen in the market.
Stepping down from the Daily chart… in the 15 min we see another structure known as a ‘Trend Channel”. The Trend channel is heading up to the resistance zone… now think to yourself! If you were a Market Maker… what would you do to trap traders at this zone?? Wouldn’t you break the trend channel under the daily resistance? See how that makes sense?! This was why I drew out the projection that the manipulators would break the trend channel first then do a massive stop hunt of sellers to the high. I drew out this projection in a London session live in front of students that are in the academy.
Later when the trend channel was broken, we see how price action did not show sellers much profit and just consolidated under the daily resistance to accumulate more orders while the banks are going long against sellers! The next day I executed the trade live in class only to see exactly what I projected play out perfectly.
CRITICAL ANALYSIS OF GBPUSD BUYER TRAP
Similar to AUDCAD seller trap… market makers trap buyers at support zone seen on the 4 hr chart. We also see a trend channel formed on the 15 min chart. Notice the Bank Manipulation as price action does a huge bullish induction that breaks the trend channel above the support making traders commit to a long while the banks were planning short. A short was executed right after the failed bullish induction.
Understand this… in order to dive deep into the mind of the Market Maker; one must first have a properly marked up chart to determine how a manipulation can take place. Learn the ways of the retail world first…. then manipulation can be seen more efficiently. If you are trying to learn how to trade… always remember this that a good trap trade is only a REFLECTION to a good marked up chart. Perfect Execution is only followed after a Perfect Markup; Market Structure is King!