If you don’t know what a bear trap chart pattern is, read this post: what is a bear trap (includes 5 tips to avoid it)?
Bear trap chart patterns are bullish patterns which means once you see that, you should only be looking to buy.
Currency Pairs: Any
Timeframe: 15 minutes and up
Forex Indicators: none required
Here are the trading rules of the bear trap trading system and they are really simple if you know how to identify the different types of bear trap chart patterns.
- Once a bear trap chart pattern forms, you wait for the bullish candlestick signal.
- Once that bullish candlestick signal forms, place a buy stop pending order at least 2 pips above the high of that bullish candlestick.
- place your stop loss at least 2 pips below the low of that bullish candlestick or if not place it 2 pips below the low of the bear trap candlestick.
- For take profit targets, aim for a risk:reward of 1:3 minimum or if not use the previous swing high as your “take profit target”…an example is shown on the chart below.
- a really powerful price action trading system especially when a bear trap pattern forms as anticipated and price tends to move up explosively.
- the risk:reward of this price action forex trading system is really great.
- simple trading rules, nothing complicated.
- Not all support levels will produce bear traps.
- all forex trading strategies have their limits and for this bear trap trading strategy, sometimes what you think is a bear trap might not be a bear trap at all and price will continue to fall regardless. So expect that trading loses do happen and no forex system is the holy grail.
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