Gaps can be traps

Gaps can be traps

Beware gaps because they can be filled. They are there for one reason and that is to trap traders and investors into weak positions. An extract from this morning’s London forex webinar explains this with an example from the YM (e-mini) contract for the Dow Jones.

00:10

Overview of market sentiment and yen buying

00:10

The speaker begins by sharing their screen and intends to highlight key points about sentiment analysis across different timeframes—five, ten, and fifteen minutes. They use the yen currency pair as an example because it is the counter currency, making it visually easier to understand the sentiment trends across various time horizons. The speaker emphasizes that the sentiment data provides a clear and simple view of market conditions.

00:39

VIX climbing and UK, US indices falling

00:39

The segment discusses current market movements, focusing on the yen being actively bought. The VIX index is climbing moderately, indicating increasing market volatility. Meanwhile, the UK Footsie 100 index is declining, as are US indices observed on Globex, with a notable spike occurring around the London market open.

01:12

Market gaps and their significance

01:12

The segment discusses the presence of market weakness with prices trading lower across multiple time frames, focusing on the importance of gaps in trading. It highlights that gaps, which are common in futures and cash markets but less so in currencies, tend to be filled over time. This phenomenon is linked to market volatility and rapid price movements, which often trigger traders’ fear of missing out, prompting quick market reactions. The speaker uses examples from Dow 30 derivative futures and E-mini markets to illustrate these concepts.

02:20

Gaps as trap moves by market makers

02:20

The speaker explains how market gaps often lead to traps for traders, as price moves sharply higher or lower to induce fear of missing out, only to reverse and trap participants in congestion or reversal patterns. This phenomenon occurs across all timeframes and is driven by market makers and big operators who create these gaps intentionally. Examples include gaps in the UK Footsie 100 and daily charts where initial moves attract traders expecting continuation, but the market quickly reverses to fill the gap, causing losses for those caught on the wrong side. Traders are advised to be cautious and recognize gaps as classic trap moves that signal potential reversals.

03:50

NQ trading volume and yen strength

03:50

The market is currently trading around the volume point of control with significant resistance and heavy volume building. For a shift in market sentiment to occur, it must be supported by volume. The market remains fragile and weak, which explains the sustained buying of the yen across multiple timeframes (3, 5 to 15, and 60 minutes). While there may be minor movements or reversals, such as a slight kick in the Canadian dollar, these are considered noise in the broader trend where the yen continues to be favored.

04:48

Upcoming forex webinar announcement

04:48

The speaker discusses the limited relevance of a certain timeframe mainly for scalping traders, who might profit from buying reversals. They announce plans to introduce a third webinar focused specifically on the US Forex market, addressing the high demand from US clients. The timing of this webinar is still undecided due to challenges such as news releases and market sluggishness around the US Open. Additionally, webinars on stocks and futures are also planned, with further details to be shared via email for those on the mailing list.

05:58

Quantum Trading indicators and platforms

05:58

The speaker discusses the availability of trading indicators at Quantum Trading, compatible with platforms such as MT45, NinjaTrader 7 and 8, and TradingView. They highlight ongoing work to integrate with TradeStation 9.5 (TradeStation Global), which links with Interactive Brokers accounts, offering powerful trading and charting capabilities across multiple markets, including spot forex. The integration process has been complex but is progressing, with plans to finalize and launch the full support and education resources within a few months. They also mention the comprehensive forex trading program available at Quantum Trading Education, which is considered a gold standard and includes all the indicators.

07:33

Quantum Trading education program

07:33

The program offers extensive content including psychology, fundamental and technical mechanics, with over 200 hours of video and 13 PDF downloads. Payment options include outright or easy payment plans. Additional resources such as books and trading platforms are available on Ana’s Amazon page. The speaker then refers back to Ana and mentions a story related to market risk involving Dave Portnoy.

08:37

Dave Portnoy’s trading losses story

08:37

A very wealthy individual transitioned from sports betting to trading during quarantine, depositing three million dollars into an E*TRADE account but losing approximately six hundred seventy thousand dollars. Despite his significant losses, he remains financially secure and humorous about the experience. The speaker advises not to trade with money you cannot afford to lose and highlights that everyone starts trading from different financial positions.

10:06

Trading advice and session wrap-up

10:06

The speaker advises that when trading, one should only use an amount of money they can afford to lose. They reflect on a previous trader who might have avoided losses or even profited by following their advice or reading their book. The session concludes with a plan to change the structure of future sessions starting Thursday, and attendees on the list will receive an email with details. The speaker thanks everyone for attending and expresses hope that they learned something new.

By Anna Coulling – creator of volume price analysis