How to lay a forex trap author, tarheel_ed The problem most people experience with forex is deciding which way the price is going to move once it breaks out of a range or period of consolidation. These periods of mini ups and downs don't really leave many clues as to what's about to happen and attempting to guess which way price is going to go isn't quite as easy as choosing the sides of a cointoss. The chances of choosing wrong is magnified tenfold in forex because it's a table saw that rips and spins and slices and gashes in all directions. Getting in and then back out with all your fingers and toes is an accomplishment in itself, but actually jumping off and walking away with with all your extremities plus a few pips, consistently, is a great feeling of accomplishment. This method attempts to minimize the question of where to enter the market. You won't have to speculate as to which way the market will surge or plunge, you simply send troops to both sides of the battlefield. We're going to be using a simple set of bollinger bands to lay a pretty good trap for such occurances. One trap is comprised of 2 seperate buy/sell entry orders (buy/stop sell/limit). To set it up, on a bare chart, add 1 set of bollinger bands with 20 periods and a deviation of 1. On the second set of bands, they too will be set to 20 periods, but set the deviaton to 2. Now, we wait. This is of course a scalping method, so keep the timeframe small. I like the 1 minute charts the best, but this will work on the 5 and 15 mintue charts as well. What we're looking for is a tightening of the bands, which is normal during periods of extreme consolidation. Once you see the price going sideways, pay attention to the bollinger bands. When they begin to flatten out and eventually compress and tighten, lay your trap by placing entry orders above and below the price. Make sure youre trap springs are far enough away that they won't be sprung by normal up and down noise, but are within reach of any sudden large movement (large movement can be defined by the range of the consolidation itself. For example, if the price is bouncing back and forth within a 10 pip range, a 30 pip surge would be a definate trigger worthy of an order, so setting your traps 10 pips away from the top & bottom of the range would be acceptible. If you were dealing with a larger timeframe, the ranges will be quite larger hence requiring larger trap buffers). It WILL definately go one way or the other, and with this special trap laid, there's no way you can miss that big move. Just be sure to remove the side of the trap that didn't get sprung so it doesnt get accidentily activated later. And stay with your trade. This isn't a swing method, nor is it even an intraday method. It's a fast paced scalpers tool, so don't set these entry orders and then walk away very far without SL & TP in place. If the price was to spring the first trap, and youre not there to decide where to get off (assuming you didn't set a TP), it could easily retrace and reverse, setting off the second trap (assuming you didn't set a SL), thereby, according to the new hedging laws, negate both trades leaving you with a loss. SL's and TP's are at your descretion, depending on what you feel comfortable with. A normal breakout will last for 2 large bars, and then begin to round up or down, once again entering into either retracement, continuation or consolidation. This would be a good place to take profit and begin preparing your traps for re-deployment because you are once again entering a period of uncertainty. The breakouts that occur because of these periods of consolidation can be substantial, and they usually shoot up or down rather quickly, maybe just a couple of bars worth of time, but many pips worth of profit. 05/25/09