🔹 What is Inducement?

Inducement occurs when the market:

Creates a structure that looks like a valid trading opportunity (e.g., a demand/supply zone, breakout, or trendline touch).

Tempts retail traders to enter trades in that direction.

Reverses quickly, sweeping their stop-losses or orders, and then moves in the opposite direction.

This mechanism allows smart money to gather the liquidity needed to fuel the true institutional move.

🔹 Why Does Inducement Happen?

Markets need liquidity to move. Retail traders often place stop-losses just below demand zones or above supply zones. Institutions exploit this by:

Inducing traders into “fake” setups.

Collecting their stop-losses (liquidity).

Then moving price toward the real target zone.

🔹 Key Takeaways

Inducement = Trap + Liquidity Grab + Real Move.

Never trust the first small pullback or breakout—often it’s just inducement.

Always look for the bigger picture: where is the nearest strong supply/demand or liquidity pool?

Patience is key—wait for liquidity grabs before entering.

 In simple terms: Inducement is the bait, liquidity is the trap, and the real move follows after retail traders are shaken out.