Today we will look at a very interesting graphical model that Larry Williams described in his writings on trading (although he does not hide the fact that he found this model from the famous trader Richard Wyckoff). It is called the “Specialist’s Trap” or “Professional’s Trap” pattern and is based on a false breakout of a small flat that formed after the trend preceding it. The pattern can be for buying or selling.
- Time interval — D1 (although it works on smaller intervals, on any).
- Instrument — any (currency pair, metals, indices, etc.).
Rules for forming the “Specialist Trap” model for sale:
1) An upward trend has formed in the market, after which, at the maximum of the movement, the price falls into a small flat with a minimum length of 5-10 days.
2) This is followed by a strong upward breakthrough of the range, and the day closes above the upper limit of the formed flat!
3) If after this the price goes down and after 1-5 days it is below the low of the day of the upward breakthrough, we conclude a sell deal.
4) Set the stop loss above the high of the breakout day or the formed high
5) There are the following options for setting take profit:
setting to an important Fibonacci level based on the last upward movement.
to an important price level.
by 1-2-3 values of the stop loss size.
For the purchase model, the conditions are reversed!