Swing High/Swing Low Trap Strategy
What Is the Swing High/Swing Low Trap Strategy?
The Swing High/Swing Low Trap Strategy focuses on one of the oldest tricks in the market — trapping traders around obvious swing points. It targets areas where price temporarily breaks a recent swing high or swing low, luring breakout traders into a position, only to reverse sharply and leave them stuck.
This strategy allows you to take advantage of that trap and trade in the opposite direction — with the momentum that catches everyone by surprise.
Why the Swing High/Swing Low Trap Strategy Works
Retail traders often base their trades on simple logic. If price breaks a previous high, they buy. If it breaks a previous low, they sell. But the market knows this. Institutional players use this behavior to their advantage by creating fake breakouts.
They push price just beyond the swing, trigger retail stops and entries, then reverse the move completely. The Swing High/Swing Low Trap Strategy helps you spot this setup and enter once the trap is revealed, not during it.
Tools and Conditions to Use
This strategy works best on clean charts without unnecessary clutter. Focus on structure and price behavior. Ideal conditions include:
• Timeframes like 15-minute, 1-hour, or 4-hour
• Clear swing highs or swing lows on the chart
• A sharp breakout through a swing level
• A fast rejection back inside the structure
• Confirmation with price action such as wicks or engulfing candles
Step-by-Step Guide to the Swing High/Swing Low Trap Strategy
Step 1: Identify a Valid Swing High or Swing Low
Scan the chart for clear swing points. These should be obvious to most traders. You’re looking for:
• A swing high formed by a candle with lower highs on both sides
• A swing low formed by a candle with higher lows on both sides
• Levels that price has respected in the past
The cleaner the swing, the more likely it will attract breakout traders.
Step 2: Wait for the Trap to Form
Now monitor what price does as it approaches the swing. The trap forms when:
• Price breaks above a swing high, triggering breakout buys
• Or price breaks below a swing low, triggering breakout sells
• The breakout is followed by quick hesitation or reversal
You don’t want to enter during the breakout. Wait for the trap to complete.
Step 3: Watch for Strong Rejection
Once price fakes out above or below the swing, watch closely for rejection. This can be seen as:
• A long wick that pierces the level and closes back inside
• A full-bodied candle in the opposite direction
• An engulfing pattern that confirms the rejection
This is the signal that the breakout was a trap and that price may now reverse.
Step 4: Enter the Trade with Confirmation
Enter once you have solid confirmation of the rejection. Entries can be:
• On the close of the rejection candle
• After an internal break of structure on a lower timeframe
• With a limit order just inside the trapped zone if the reversal is clean
Make sure the rejection is strong and clear before entering.
Step 5: Place a Smart Stop Loss
Place your stop loss just beyond the wick that formed during the trap. This gives the trade space to breathe while protecting you in case price retests the fake level.
Avoid placing stops too tight or inside the wick itself.
Step 6: Set a Realistic Take Profit Target
Once you’re in the trade, plan your exit using structure or ratio-based targeting. Consider:
• The midpoint of the previous range
• The next swing high or swing low in your trade direction
• A fixed 1:2 or 1:3 risk-to-reward setup
• A previous area of consolidation or imbalance
Let the market structure guide your take profit placement.
Risk Management Tips
• Don’t assume every breakout is a trap — wait for confirmation
• Avoid entering while price is still breaking the swing level
• Use lower risk if volatility is unusually high
• Don’t force the setup in low-volume or ranging conditions
Common Mistakes to Avoid
• Trading the breakout instead of the reversal
• Entering without confirmation of the trap
• Using swing levels that are not obvious or clean
• Placing stops inside the wick and getting stopped out early
• Ignoring the broader market context or trend direction
Quick Reference Table
What Comes Next?
The Swing High/Swing Low Trap Strategy teaches you how to stop getting trapped by fake breakouts — and instead use them to your advantage. It’s a mindset shift that puts you in sync with how the market really works, not how it pretends to behave.
Next, we’ll cover the Equal Highs/Lows Liquidity Pool Strategy — a setup focused on areas where stop losses build up and how to use that hidden liquidity as an edge.