{"id":1272,"date":"2025-07-16T19:17:50","date_gmt":"2025-07-16T13:47:50","guid":{"rendered":"https:\/\/www.definedgesecurities.com\/trading-strategies\/?p=1272"},"modified":"2025-07-16T21:38:33","modified_gmt":"2025-07-16T16:08:33","slug":"bear-trap-trading-strategy","status":"publish","type":"post","link":"https:\/\/www.definedgesecurities.com\/trading-strategies\/bear-trap-trading-strategy\/","title":{"rendered":"Bear Trap Trading Strategy"},"content":{"rendered":"\n<p>Traps are very interesting P&amp;F patterns. Bear trap formation shows when the bears are trapped that could lead to possible price thrust. The trap patterns are explained <a href=\"https:\/\/shelf.definedgesecurities.com\/point-figure-chart\/major-patterns-point-figure-chart\/trap-pattern\/\">here.<\/a><\/p>\n\n\n\n<p>Below is a possible strategy in the Momentify Trading setup.<\/p>\n\n\n\n<p><strong>Strategy Name:<\/strong> Bear Trap Trading System<\/p>\n\n\n\n<p><strong>Stock Group:<\/strong> Your choice<\/p>\n\n\n\n<p><strong>Allocation:<\/strong> Your choice<\/p>\n\n\n\n<p><strong>Number of Stocks:<\/strong> Your choice<\/p>\n\n\n\n<p><strong>Rank Criteria:<\/strong> Volar<\/p>\n\n\n\n<p><strong>Position Size:<\/strong> Fixed<\/p>\n\n\n\n<p><strong>Ranking Period:<\/strong> 252<\/p>\n\n\n\n<p><strong>Retracement:<\/strong> Within 30% of 52-week high<\/p>\n\n\n\n<p><strong>Moving Average Filter:<\/strong> 200-EMA<\/p>\n\n\n\n<p><strong>Relative Strength:<\/strong> Above Moving Average<\/p>\n\n\n\n<p><strong>Entry Condition:<\/strong> Bear Trap above Moving Average<\/p>\n\n\n\n<p><strong>Exit Condition:<\/strong> Below Moving Average<\/p>\n\n\n\n<p><strong>Market Trend Filter:<\/strong> Change the exit strategy to Double Bottom Sell or High Pole when Nifty turns bearish, or when X% breadth rises above 75, or X% breadth falls below its moving average.<\/p>\n\n\n\n<p><strong>Please note:<\/strong> When using Point &amp; Figure charts, the box-value can be defined based on the stock universe:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>0.25% x 3<\/strong> for large-cap stocks<\/li>\n\n\n\n<li><strong>1% x 3<\/strong> for other stocks<\/li>\n\n\n\n<li><strong>3% x 3<\/strong> for medium- to long-term trading setups<\/li>\n<\/ul>\n\n\n\n<p>You can run this strategy on large-cap, mid-cap, small-cap, micro-cap, or the entire market universe. It can also be applied to various sectors, thematic indices, or even your own custom group of stocks.<\/p>\n\n\n\n<p>In the above template, position sizing is kept as <em>fixed<\/em>. However, you can also opt for ATR-based or Risk-based position sizing methods.<\/p>\n\n\n\n<p>It is important to understand that the above rules are meant to help you understand the structure of the template. <strong>You are encouraged to tweak the parameters as per your comfort<\/strong>, and backtest across different time periods and stock universes to build your own customized trading template.<\/p>\n\n\n\n<p>You can customize the exit strategy \u2014 including setting your preferred stop-loss percentage and target levels<\/p>\n\n\n\n<p>You can use this base template, make necessary adjustments, and save it in your <strong>Momentify Trading dashboard<\/strong>.<\/p>\n\n\n\n<p>To backtest your strategy, go to:<br><strong>RZone \u2192 Backtesting \u2192 Momentum Trading Backtesting<\/strong><\/p>\n\n\n\n<p>The above strategy in the Momentify Trading Setup is a long-only (buy-only) strategy and can be applied across any market segment \u2014 cash or derivatives, across any timeframe or instrument.<\/p>\n\n\n\n<p>In Momentify trading setups, there are two options: Fresh and Running.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Running:<\/strong> Displays stocks that qualified earlier and are still running in the same column. These stocks are ranked based on the selected ranking criteria.<\/li>\n\n\n\n<li><strong>Fresh:<\/strong> Shows only those stocks that qualify the setup on the current day, also ranked based on the selected criteria.<\/li>\n<\/ul>\n\n\n\n<p>The stock basket in Momentify is generated based on the previous session\u2019s closing price.<br>To scan stocks using live market prices, simply click the <strong>Scan<\/strong> button.<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Traps are very interesting P&amp;F patterns. Bear trap formation shows when the bears are trapped that could lead to possible price thrust. The trap patterns are explained here. Below is a possible strategy in the Momentify Trading setup. Strategy Name: Bear Trap Trading System Stock Group: Your choice Allocation: Your choice Number of Stocks: Your &#8230; <a title=\"Bear Trap Trading Strategy\" class=\"read-more\" href=\"https:\/\/www.definedgesecurities.com\/trading-strategies\/bear-trap-trading-strategy\/\" aria-label=\"More on Bear Trap Trading Strategy\">Read more<\/a><\/p>\n","protected":false},"author":3,"featured_media":1308,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23,17,26,20],"tags":[],"class_list":["post-1272","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investment-strategy","category-momentum-trading-strategy","category-point-figure","category-positional-trading-strategy"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Bear Trap Trading Strategy - Trading Strategies<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.definedgesecurities.com\/trading-strategies\/bear-trap-trading-strategy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bear Trap Trading Strategy - Trading Strategies\" \/>\n<meta property=\"og:description\" content=\"Traps are very interesting P&amp;F patterns. Bear trap formation shows when the bears are trapped that could lead to possible price thrust. The trap patterns are explained here. Below is a possible strategy in the Momentify Trading setup. Strategy Name: Bear Trap Trading System Stock Group: Your choice Allocation: Your choice Number of Stocks: Your ... 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