What is Inducement in Forex – Market Structure
Do you want to master inducement in forex like a pro to level up your trading?
Inducement in forex is the strategy which exposes the smart money traps for retail traders. To be a successful trader you should know about these smart money traps and avoid them.
In this article we will be exploring the valid inducement in forex with real market examples to improve win ratio in trading.
Now lets start with defining the ICT judas swing.
What is Inducement in Forex?
The act of persuading someone to do something is called inducement. In trading inducement means any key level or market structure which persuades a trader to execute a trade.
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It is basically a smart money trap for retail traders which leads them in believing for a certain bullish or bearish move while in reality market does not move in that way and it goes against retail trader’s expectations.
How to identify Inducement in Forex?
As we discussed earlier that inducement is smart money trap which can be an order block, supply/demand zone or support/resistance zone. But we have to identify which order block, supply/demand zone or support resistance zone is inducement.
To identify inducement in forex market you should first know about “Valid Pullback”, “Break of Structure (BOS)” and “Change of Character (CHOCH)”. After going through these concepts you will be able to understand inducement very well.
On the basis of structure break like BOS and CHOCH we will be explaining the inducement in two types
Inducement in case of CHOCH is the very first pullback before market changed its character. In other words we can say that when market changes its character you have to look back in the price leg which lead to CHOCH and find a valid pullback to mark inducement.
Real market examples of inducement in case of bullish and bearish CHOCH are shown below.
Inducement in case of BOS is the very first pullback before market broke the structure. In other words we can say that when market breaks its structure you have to look back in the price leg which lead to BOS and find a valid pullback to mark inducement.
Real market examples of inducement in case of bullish and bearish BOS are shown below.
How to Avoid Inducement in Forex?
To avoid inducement in forex you have to follow just one rule “Do not take a trade until inducement is grabbed.”
So in bullish trend you should not take a buy trade until price clears the inducement by going below inducement low and hunting stop losses.
While in bearish trend you should not take a sell trade until price goes up and clears the inducement by going above inducement high.
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