Mapping Market Structure and Identifying Inducement, POI, and Trade Entries

Jul 13, 2024

Mapping Market Structure and Identifying Inducement, POI, and Trade Entries

Key Points

  • Mapping structure from top to bottom (and vice versa).
  • Identifying inducements and Points of Interest (POI).
  • Entering trades based on market structure.
  • Concepts applicable for different timeframes.

Timeframe Combinations

  • For 4-hour higher timeframe: Use 15-minute for entry.
  • For 1-hour higher timeframe: Use 5-minute for entry.
  • For 15-minute day trading: Use 1-minute for entry.

Steps for Mapping Market Structure

1. Identify Higher Timeframe Trend

  • Start with the higher timeframe to understand overall trend direction (bearish or bullish).
  • Example: 15-minute chart for main trend, 1-minute for finer details.

2. Mark Highs and Lows

  • Determine higher highs, higher lows, lower highs, and lower lows.
  • Example: From top move (higher high) and down to the recent low (lower low).
  • Confirm trend changes using breaks of structure (BOS) and changes of character (CHoCH).

3. Recognize Inducements

  • Inducement: Pullbacks that need to be taken out to confirm higher highs/lows or lower highs/lows.
  • After confirming inducement is taken out, determine next valid structure level (higher or lower).

Trade Entry Guidelines

1. Confirmation Before Entry

  • Wait for inducements to be taken out before entering trades.
  • Inducement-based confirmation to avoid 'Smart Money Trap.'

2. POI and Minimal Imbalance

  • Unmitigated Shadows can act as POIs for potential entries.
  • Single-candle order blocks for precision entries.

3. Dealing with Internal Structures

  • Internal moves can mislead; focus on major trend structures for reliable entries.

Example Process Walkthrough

Bearish Market Example

  • Starting Point: Market is in a clear downtrend.
  • Marking Structure: Identify and confirm lower highs and lower lows based on inducement take-outs.
  • Executing Entries: After a confirmed BOS and inducement taken out, mark lower high as entry point.

Bullish to Bearish Change

  • Recognition: Identify when market shifts from bullish to bearish by breaking previous lows and failing to create new highs.
  • Action: Mark new lower highs and wait for bearish entries after inducements are confirmed.

Practical Application

Lower Timeframe Execution

  • 1-Minute Refinement: Use 1-minute chart to refine entry points after marking higher timeframe structure.
  • Mitigation and Entry: Look for unmitigated order blocks, single-candle order blocks, and inducement take-outs before entering trades.

Strategies for Consistent Entries

  • Always half wait for inducements and liquidity grabs before entering orders.
  • Use single-candle order blocks in refinement process to confirm entries.

Additional Tips

  • Liquidity Sweeps: Check for liquidity grabs to validate structural POIs before entering trades.
  • Monitoring: Continuously monitor structure shifts and adaptability for changing market conditions.

Conclusion

  • Mapping and identifying key market structures, inducements, and POIs is crucial for accurate and effective trade entries.
  • Utilize proper timeframe combinations and precise order block refinements for effective trading.
  • Confirm and validate entries based on clear structural guidelines to avoid false signals and 'Smart Money Traps.' Happy Trading!

For more details, join our free Telegram channel (link in description) and keep learning!