Why Your POIs Are FAILING In 2025 (Supply & Demand Updated Guide)

Summary

This video delves into advanced market structure analysis, focusing on identifying and understanding key price action signatures like inducements, liquidity runs, and smart money traps. It emphasizes the importance of recognizing both bullish and bearish trends, understanding the dynamics of supply and demand zones, and using time-based analysis (such as the New York and London opens) to refine trade setups. The core message stresses the significance of a holistic approach, combining technical indicators, price action, and strict confirmation criteria to differentiate between real setups and traps, helping traders develop a structured, profitable strategy.

Takeaways

• 😀 Understanding market structure involves identifying break of structure (BoS) and recognizing trend reversals.
• 😀 Inducement zones represent areas where liquidity builds up, potentially leading to either a genuine market move or a smart money trap.
• 😀 Smart money traps can be identified by recognizing false breakouts and manipulations in price action, often involving trend lines or demand zones.
• 😀 Time-based manipulation, such as market open hours (e.g., London or New York), plays a crucial role in distinguishing genuine moves from traps.
• 😀 Price action signatures, such as higher highs or lows, should be analyzed in context with time windows to predict price movement more accurately.
• 😀 A thorough understanding of supply and demand zones requires examining both higher and lower timeframes to spot inducements and liquidity buildups.
• 😀 Real inducements often involve structured breakouts, while smart money traps are characterized by false price movements or manipulations.
• 😀 Traders should develop a checklist to categorize setups into probability zones (low, medium, high) based on factors like time of day and price action context.
• 😀 Identifying weak points of interest can be done through the combination of timing, trend analysis, and the specific behavior of price within a supply/demand zone.
• 😀 A restricted trading strategy, where traders follow a clear set of rules and confirmations, can significantly improve profitability by eliminating guesswork.

Q & A

What is the importance of understanding the market structure in trading?

Understanding market structure helps traders identify trend directions and potential reversal points, allowing them to make more informed decisions about entering and exiting trades. It serves as the foundation for analyzing price movement and supply/demand dynamics.

What is the role of 'inducement' in price action analysis?

Inducement refers to price action that creates the illusion of a trend continuation or reversal, prompting traders to take positions in the wrong direction. Identifying inducements is crucial for spotting smart money traps and making more accurate trading decisions.

How does a smart money trap function in the market?

A smart money trap occurs when liquidity is built up in a way that misleads retail traders into making trades based on false breakouts or price movements. These traps often result in price reversing after liquidity has been swept, leading traders into losing positions.

Why is timing essential when identifying market trends?

Timing is critical because specific time windows, like market opens (New York or London), influence the probability of a breakout or reversal. These windows are periods of high liquidity and volatility, which can help traders predict the likelihood of successful trades.

What is the significance of supply and demand zones in price action trading?

Supply and demand zones represent areas where price is likely to reverse due to an imbalance between buyers and sellers. However, just identifying these zones is not enough. Traders must assess price action in lower timeframes to confirm the validity of these zones.

How does the concept of liquidity pool relate to market structure?

A liquidity pool is an area where many stop losses and limit orders are concentrated, which can create significant price movements when these orders are triggered. This concept helps traders understand where market makers may drive price in order to trigger stops and gather liquidity before reversing the market.

What is meant by a 'higher high' and 'higher low' in market structure?

A higher high occurs when the price surpasses a previous peak, and a higher low occurs when price forms a low point above the previous low. These patterns are signals of an uptrend and are used to identify bullish market structure.

What role does a 'break of structure' play in trading?

A break of structure occurs when price breaks key levels or trendlines, signaling a potential trend reversal or continuation. It’s a key signal for traders to reassess their market outlook and adjust their positions accordingly.

How can traders differentiate between a valid inducement and a smart money trap?

Traders can differentiate a valid inducement from a smart money trap by analyzing price action on lower timeframes, considering key time windows, and understanding the liquidity buildup and false breakouts. Real inducements tend to be followed by genuine price moves, while smart money traps result in quick reversals after trapping traders.

What does it mean to be a 'restricted trader' and why is it important?

A restricted trader is someone who follows a strict, mechanical trading approach based on well-defined criteria for trade entries, exits, and risk management. This discipline helps avoid emotional decision-making and improves long-term profitability by focusing on high-probability setups.