BULL AND BEAR TRAPS EXPLAINED
Understanding Bull Traps and Bear Traps in Trading In the financial markets, every price movement tells a story and not all stories are honest. Some moves are designed to trap emotional traders , taking their positions out before the real move begins. These deceptive setups are called bull traps and bear traps . Knowing how to identify and avoid these traps is one of the hallmarks of professional trading. It separates disciplined traders from emotional ones, and consistently profitable traders from the rest. What Are Bull Traps? A bull trap occurs when price action lures buyers into the market just before a reversal downward. The market gives the illusion of strength and breakout, only to reverse sharply and liquidate those long positions. Bull traps are designed to trap buyers , which is why they are called bull traps. Smart money uses them to gather liquidity (buyers’ stop losses) before pushing price...