Video Transcript:
Order Flow sometimes shows strong buying or selling, and it looks like the trend should continue. But what if it doesn’t? That’s where traders get trapped, and it often leads to a strong reversal. In this video, you’ll learn how to spot it and how to trade that reversal move. Now, another concept that I’d like to show you is trapped traders. This is quite a popular concept, and it’s funny that it’s actually called trapped traders, because those traders are not really trapped, but people keep calling them that. So let’s stick with that terminology and talk about them as trapped traders as well. Here’s what it means. Take a look at this chart. Price goes up, and then at this footprint the order flow is giving you every signal that it should continue to go up. Right? We have heavy volumes here at the top of this footprint, and those heavy volumes are at the ask, which means aggressive buyers are jumping in here at the top of this footprint. Right? So this is screaming at you that the price should continue to go up, but for some reason it doesn’t. It goes down. That’s weird. It shouldn’t do this, right? So if the price doesn’t go up, then it’s likely that it will go down. There isn’t really any other option. Basically, this is telling you that buyers started to jump in here, but then they didn’t really follow through. The big players probably have different plans for the game. And if it’s not up, then it’s down. Those guys are called trapped traders, as if they were trapped in their long positions. Obviously, they are not they can exit their long positions anytime but people call them trapped. Eventually, they’ll have to sell, which can help fuel the selloff, but the selloff is not just caused by those traders closing their longs. The main logic is that you got a clear signal that the market should go up. It didn’t it went down and that’s confirmation for you to go short as well. Here is another example of trapped traders. The price went slightly up, and at this point we had a buying imbalance. This is basically screaming at you that the price should go up, right? A buying imbalance at the top of this footprint. But the funny thing is, it doesn’t. The price goes down. So if the price is not going up, then it’s likely to go down. Those guys are trapped traders. They got trapped in their longs. The price reversed, and they’ll eventually have to exit. If the price did not follow through and did not go up, then you should go short, because clearly the plan is not to go up but to go down. Now one last example of trapped traders here. You can see the price was dropping, and this was screaming at you. Those selling imbalances are screaming that the price should go even lower. By the way, those heavy volumes don’t need to be exactly at the low of the footprint, but they should be close. It should really scream that the market should go down. But if it doesn’t in the next footprint, then you should go long, because those guys are trapped sellers. I hope you liked the video.
If you want to get your hands on my Order Flow trading education and indicators, then head over to my website at trader-dale.com. Click the button that says trading course and tools, and it will take you to the page where you can get my Order Flow pack. It includes a 12-hour course on trading Order Flow, my custom-made Order Flow software, and also my custom-made Volume Profile software. Thanks for watching the video. I look forward to seeing you next time. Until then, happy trading.
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