The bull trap forex trading strategy refers to a technique one utilizes in order to avoid purchasing a breakout of a resistance level in the thought that the price is going to increase.
Bull traps are usually caused by professional foreign exchange traders (big money forex traders) especially when they are in need of liquidity for their own exchanges.
- All currency pairs are applicable in bull trap forex trading strategy.
- One hour and upwards is the recommended time frame for this strategy to work.
- One must have acquired knowledge of a bluff reversal bars.
- None of the foreign exchange indicators is required.
- When the price moves up to a main resistance level, you need to relax and observe the price action that occurs on that resistance level to notice if you highlight a bull trap chart pattern. Once you have observed and realized a possibility of a bull trap chart pattern, then proceed to the second step.
- Position an auction stop pending orders for at least two pips beneath the low.
- Position a stop-loss for at least two pips higher up, the high.
- For take-gain, target for the prior swing low price level or target a risk to reward ratio of at least one which is equivalent to three.
Utilize this strategy at your own risk. WindsorForex.com cannot be responsible for any losses associated with using any strategy presented on the site. It’s not recommended to use this strategy on the real account without testing it on demo first.