What is Bull trap and Bear trap? vision awareness

What is bull Trap and Bear trap in market?

What is bull Trap?

Bull trap means, you know, when the price in the stock market is constantly moving up and down, in which it often breaks the support or resistance level. When there is a characteristic uptrend in any stock, the price is constantly moving higher high and lower high.

While all this is going on, the price breaks the resistance level and forms a bullish green candle at the top of the resistance level. People think that now this price has broken the resistance level and from here the price goes up. People take quick trade entries. Some get Stoploss, some don't. The first Green Bullish candle gives clossing above the resistance level, and immediately the second Bearish Red candle below of that level.  Price Makes a low below the previous bullish candle, the price shows a downtrend back from there.

In the meanwhile, the traders who were bullish got caught in the trap. This is what we call bull trap. Now, I think you understand. Most Retail Trader's are caught in this trap.

Bear trap म्हणजे काय?

Bear trap is when the price is in downtrend and rises to a certain support level. When the price rest on support level. a bearish red candle is formed and support level breaks and clossing below support level. 

Traders takes entry in trade without any consideration. They think that the price has broken the support level. Now the price will go down further from here. immediately turns the next candle into a green bullish candle and returns to that support level. Indicates price uptrend.

Here the traders who are more Bearish are arrested so it is called "Bear Trap".

Bear trap bull trap

As you can see in the image below, the price came down from the support level and the price bounced up. Coming back to the price support level, Price broke the support and give clossing below support level.  The next Bullish green candle immediately gives clossing at the support level.

Hope you understand Bull Trap and Bear Trap. Let's see how you can save yourself from these things.

There are some things to keep in mind while trading in this situation.

  • Whenever you see support or resistance level break, let the price confirm in advance that it is indeed a breakout or breakdown.
  • It is very important to do risk management and make stop loss with trading.
  • You can confirm using the indicators indicating volume and volatility.
  • Volume and volatility should also increase when Price breaks resistance or support. It also signals to you that a real break out or false break out.

How to use Bull trading strategy and Bear Trading Strategy. Read this blog.

We are using the online portal of Trading view to show charts. Which is very attractive and most people used it.

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