Trading Bull Traps and Bear Traps: Possible?

[agrau]

Dear all,

I wonder if it is possible to successfully trade bull traps or bear traps. Spotting them seems to be quite easy, like e.g. a channel breakout and a return into this channels within just a couple of ticks or days, depending on the time frame.

Literature is small on b/b traps. I've found a couple of pages in Schwager's Technical Analysis and a bit in a book on point&figure charting, but that's it.

Anybody tried this? Ideas? Experiences? Pointers?

Thanks in advance,

Andreas

 

[armaniman]

Probably the best discussion in print is in Victor Sperandeo's books (Trader Vic and Trader Vic 2), where he identifies the pattern as 2b, and gives several trading examples. Trading bull/bear traps is also a mainstay of Teresa Lo (who in honor of Sperandeo also refers to them as "2b"): if you choose to join her web site/chat room at http://www.trendVuew.com you can see her make many bull/bear trap trades and discuss them in detail.

 

[RAMOUTAR]

Quote from agrau:

Dear all,

I wonder if it is possible to successfully trade bull traps or bear traps. Spotting them seems to be quite easy, like e.g. a channel breakout and a return into this channels within just a couple of ticks or days, depending on the time frame.

Literature is small on b/b traps. I've found a couple of pages in Schwager's Technical Analysis and a bit in a book on point&figure charting, but that's it.

Anybody tried this? Ideas? Experiences? Pointers?

Thanks in advance,

Andreas

Be very careful with those setups. Pay very close attention to the context of the trend in the larger timeframe, and don't lose sight of the s/r to the left. I, and many I know have been SEVERELY burned with those setups.

 

[spreadem]

Be very careful with those setups. Pay very close attention to the context of the trend in the larger timeframe, and don't lose sight of the s/r to the left. I, and many I know have been SEVERELY burned with those setups.

Agreed.

As soon as I see a chart on one time frame I look at the larger timeframe for confirmation before making the trade. That practice has helped me to filter out some bad trades.