Inducement
A small move that lures you in early — right before the real one.
Inducement — what it is?
Inducement is a small pocket of liquidity sitting between current price and the real zone of interest. It exists to collect everyone who enters too early.
The mechanics are simple. After a break of structure price makes its first pullback. The pullback looks tidy, and most people enter on it — but it collected no liquidity, which is why it does not hold.
The real zone lies further on, beyond the extreme of that pullback. First the stops of the early entrants get taken, and only then does price reach the zone the move actually comes from.
Inducement — how it is built?
The order of markup: find the BOS, mark the first pullback after it — that is the inducement — wait for its extreme to be broken, and only beyond that look for the first unmitigated order block or imbalance. Enter only once the inducement has been swept.
Inducement — common mistakes
Entering on the first pullback after a break of structure.
Calling small lower-timeframe wiggles an inducement for a higher-timeframe zone: the scale has to match.
Treating the inducement sweep as an entry signal in its own right — it is only a condition.
Finding the inducement in hindsight, fitting the markup to a move that has already happened.
Related to
Glossary
- liquidity
- a cluster of pending orders and stops in a particular zone. The fuel for large capital to move.
- zone of interest
- an area marked up to look for an entry point.
- break of structure
- price closing beyond the last structure point **in the direction of the trend**. It confirms continuation.
- pullback
- a corrective move inside the trend.
- Order block
- the last candle in the opposite direction before the impulse that broke structure.
- imbalance
- a stretch of chart price went through too quickly, without even trading.