Market Behaviour

3 Things the Market Does at any given time

This is a typical market maker strategy. It does two things,

1. Hits the stop losses. We are all taught to place our stop losses
below the lows and above the highs, this pattern hunts for money
(stop losses)

2. Entice other time frame traders (OTFT). Depending on which

timeframe the Highs or Lows are formed, there are traders from that
timeframe and below placing sell orders below that low and buy
orders above the high, perhaps price closed below the lows and
above the highs on lower timeframe, this pattern traps all those
 traders, and immediately reverse, the reversal is swift and decisive,
placing serious heat into the trapped traders.

Always remember that most breakouts of a key highs/low will fail, therefore trading a
false breakout strategy can be consistent and profitable.

This is a commonly traded system where price breaks out of a High or Low,
pullbacks, and continues to move in the direction of the breakout.

Learning the conditions to trade a trend-based system is key for a day trader, many
times, what may appear to be a trend could actually be a trap, for the traders who
have not taken profits, the market would reverse at some point, and the volume
above or below a swing highs or lows would serve as juice for price to move strongly
in the opposite direction.
Therefore, to trade a trend-based system successfully, make sure you are doing
business at the highs/lows of the pullback, not the immediate
break of structure. This will be shown in subsequent sections.

We usually see a range-bound market after a significant move in the market. After a
big move, the market will consolidate because it needs new orders/volume in the
market to continue that trend or reverse price. When a market goes in a range, it
attracts both buyers and sellers, sooner or later, one or both stop losses would be
hit, generating the liquidity/juice required for price to begin its movement. Think of it
as refueling your car after a long trip.