Understanding Stop Takes: How Market Makers Create Gift Trades

PAT Indicator — A TradingView Indicator for Reading Market Belief

Trade the crowd’s conviction, not just the candles. Clear, testable entries and exits on TradingView.

PAT IndicatorMJC Training Ltd

Welcome to this follow-up video from yesterday's session. Before we dive in, a quick note - I'm currently in Spain and will be heading to the UK on Sunday for three to four days to visit family. This means Monday and Tuesday's videos won't be available, but I'll be back with fresh content on Wednesday.

Following Up on Yesterday's Analysis

Let me draw your attention to GBP JPY, where I marked that green circle with upward and downward lines yesterday. I mentioned wanting to see decisive action to either side to determine our trade direction - and boy, did we get exactly what we were looking for!

Reading the Market Structure

Starting with our 30-minute chart, we can see the prevailing downward trend clearly indicated by the red dots in our indicator. This tells us the market's strength is currently bearish, so we're anticipating downward movement.

The key principle here is simple: we look for weakness underneath the dashed line and strength above it. When the market dropped below our line and reached the outer extremity of the floating zone, this created a high-probability setup.

Think of it like a rubber band - when it gets stretched to its limit (overruns itself), it naturally bounces back in the opposite direction.

The Stop Take Phenomenon

Here's where it gets really exciting, and why I love showing these clear stop take examples. They're absolutely crucial for your future trading success.

Most traders saw this market moving down under the line and positioned themselves for continued weakness. They placed their stop losses in what seemed like a "safe" area above their entries. But here's what the market makers saw: an opportunity.

How the Stop Take Unfolded

1. The Setup: Traders entered short positions as the market moved into the lower floating zone
2. The Trap: Stop losses accumulated above the recent highs - a natural, logical place that traders place their stops.
3. The Stoptake: Market makers drove the price up rapidly, triggering all those stop orders
4. The Profit Release: Once the stops were cleared, the market resumed its intended downward direction

This upward spike through our yellow line wasn't random - it was a calculated move to clear out weak hands before the real move began.

Why This Creates "Gift Trades"

When you see a stop take like this, it tells you the entire story about where the market is highly likely to go next. After clearing the stops, the market dropped back into the lower half of the floating zone, creating an exceptional selling opportunity.

You can see this same stop take pattern (Content) played out perfectly on Euro JPY as well - market drops toward the floating zone, traders get comfortable with their stop placement, then BAM! The market spikes up to clear those stops before resuming the downward trend.

Using Multiple Timeframes for Precision

I've carried these markings forward to the 5-minute chart using the "sync drawings globally" feature (make sure this is checked in your settings). This allows you to see exactly how the stop take looks across different timeframes and identify your precise entry point.

After the stop take completed and the market dropped back under the dashed line into the lower floating zone, you had a crystal-clear selling opportunity with excellent risk-to-reward potential.

The Beauty of This Strategy

These stop take setups are gifts because they:

• Remove weak traders from the market
• Provide clear directional bias
• Offer low-risk, high-reward entry points
• Occur 2-3 times per week when you know what to look for

The combination of the stop take signal plus the market dropping into the lower half of the floating zone creates what I call a "gift trade" - everything aligns perfectly for a high-probability opportunity.

Conclusion

Learning to identify and trade stop takes will transform your trading results. They provide some of the clearest, most reliable signals the market offers, and when combined with proper floating zone analysis, they become incredibly powerful tools in your trading arsenal.

Watch for these patterns, practice identifying them, and you'll start seeing opportunities where others only see confusion.

I'll catch up with you in the next video. Take care and have a wonderful day!

PAT Indicator — A TradingView Indicator for Reading Market Belief

Trade the crowd’s conviction, not just the candles. Clear, testable entries and exits on TradingView.

PAT IndicatorMJC Training Ltd