Definition of Last Trapped

Definition of "Last Trapped"

For those of you who are not familiar with my set ups, here is a definition of "Last Trapped"

I refer to "Last Trapped" areas as being areas where traders who were shorting or covering long positions were left behind as the market moved up fast. Traders who were maybe not using a stop would have been trapped there, and as the market moves back up to that area those traders will be looking to get whole again and buy the market.

I often incorporate "Last trapped" areas in finding the next day's support and resistance levels. I cover "Last Trapped" areas in depth in my new course "Read the Greed-LIVE!:Vol.II"

To watch a video of "Bounce to Last Trapped", CLICK HERE

QUESTIONS/ANSWERS FROM "LAST TRAPPED" WEBINAR

Q: Does a Double Bar reversal coincide with a tick divergent?

A: A double bar reversal does not have to have tick divergence; if it does it just adds more weight to the trigger.

Q: Do you use smaller ema to help for trigger entry?

A: I don't personally, but on a one min chart this might be helpful. The one minute chart I use has a 9 and 18 period ema for a trend guide in a good momentum move. If that crosses on a turn up from support, it should be helpful for a trigger. Vise versa, on a turn down from resistance.

Q: Do you have trading room open daily?

A: The instant messenger room is open daily as a complimentary addition to the nightly updates. (see sample)

Q: What the prices for the e-book and trading room?

A: The e-book is $127. However, we also have a combo package available which also includes a 3 hour audio from a teleseminar that I did several years ago. If you choose to get both, the combo is $138. This includes a 2 week "real time" trial of nightly updates (see sample) and access to our instant messenger room. (see log sample)

Q: How can you tell if the support or resistance will hold or break?

A: Let's take resistance first, if the market is in an uptrend with good momentum and then begins to stall out as it approaches resistance and especially if it coincides with a tick extreme then I expect that resistance will hold. If in this same case, price runs up to resistance with no sign of a turn or loss of momentum, then I step back and wait, as the odds are not as good if that happens. You can turn this around for moves down to support. If the market is dropping and then begins to slow as it reaches support, and we get a tick extreme at the same time then chances of a bounce from that support have a better chance of happening. If the market shows no sign of stopping at support, then I back off.

Q: Do you think it unwise as a rule to sell resistance, and buy support?

A: I think it's unwise to blindly sell resistance and buy support. Better off to judge the action as support or resistance is approached. (See answer in above question)

Q: Do you ever try to bracket support/resistance when you're not sure if it will break and trap the shorts or longs? In other words bracket so your stop reverses lets say?

A: No, I don't do that, primarily because sometimes there will be a poke above resistance/or below support that gets quickly reversed, for instance "the prarie dog" (found in my e-book) So, if I were bracket trading this, and the market did as noted here then I would be a "last trapped", I would be caught just as the market does make a turn. I know this isn't always the case, but the brackets just seem a bit risky. What might be a better idea is to see if that support/resistance is held on a pullback after the breakout, as that can turn into a good entry point.

Q: How do u define a stall and on what chart?

A: A stall is when price basically stops moving in one direction or another and begins to move sideways. On this I like to watch the shorter time frames, the 2 min. or 1 min chart, as that gives you more bars to watch. As for how long a stall lasts, it could be for as little as 3-4 minutes, or as long as maybe 15 minutes at the most.

Q: During the day when you say it's good for a scalp, how many ticks do you suggest?

A: I'm usually looking for 4-6 ticks.

Q: I'm taking too many 3 - 4 tick losses, any ideas?

A: I don't know the particulars of your situation, it could be different things. It could be that your entry is a little early, or a little late. Maybe your entry is not at a valid support or resistance area. I would have to have more information in order to help you specifically.

Q: Why a 5min tick, do you ever use 2min tick?

A: No, I don't use a 2 min tick; however, I do think it's a good idea. I'm just used to a 5 minute tick because that's how I set things up years ago and have gotten used to it (I'm a trading dinosaur). However, i can see that using it on a 2 min basis would give a more clear view on the action of the tick. Good question, I may just begin using the 2 min tick myself.

Q: I see more waves on a 2min tick, why do you like the 5min tick?

A: Good question that I get quite often. (Please see answer above)

Q: On a "1-2-3" top does the pattern stay in effect as long as the 2 does not exceed 1?

A: A "1-2-3 top" is one of my set ups found in the e-book. By definition, the "1" is a high for the move, then the first pull back would be the "2", then the bounce back towards the high would be the "3". The "3" should not take out the previous high (which would be "1") for the set up to remain valid.

Q: Do you get in all at once or do you add?

A: The majority of the time on day trades, I put my normal position on all at once, and either scale out (take off 1/3 position at 3 or 4 ticks, tighten stop, and keep the rest until it looks like the move is about over), or exit them all at once. On swing trades, it's different. I start with a smaller position and then add when proven correct (when the market has gone the direction I expect) or, there is a set up to add to the position (i.e.: like a pull back to "last trapped").

Q: How many contracts do you trade?

A: I trade in multiples of 3. For instance, 3, 6, 9, 12, etc.

Q: Why do you use a 13 min chart? 405 min divided by 13 is an uneven figure and the last 32nd candle has only 2 minutes?

A: I suppose I could use a 15 min chart, and I do that on the cash indices. However, I like 13 min chart because not everyone is watching that one, and It gives a bit of a different view of the market action.

Q: Do you enter the market with an "at market" order or limit order?

A: In most cases, I enter the market on a limit order. That way I have control on where I get in and out. You can use a "market if touched" (MIT) order to exit at a predetermined level, or a market order even in those cases. However, in most cases I like the use of limit orders. Sometimes getting an entry at your price may not get filled and then the market moves your direction. If this is happening to you, then consider either joining the offer (on a short trade) or joining the bid (on a trade on the long side).

Q: Is the Tick necessary when trading the "last trapped"?

A: No, it's not necessary. However, if you get a tick extreme, and then a stall, it would help with the set up. Sometimes there are tick divergences (the tick will go up and make a high, then it will pull back a little bit, and then bounce back up to a lower high before turning down again - vise versa on the downside) at last trapped that can help you time your entry.