You identify a perfect Order Block. Market Structure is broken. You set a Limit Order.
Price hits your entry, reacts slightly, then smashes through your Stop Loss, taps a level slightly lower, and then flies to the moon.
You were right about the direction, but you were wrong about the level.
You traded the Inducement (IDM) instead of the real Point of Interest.
In this guide, we will uncover the biggest trap in Smart Money Concepts and how to distinguish between a "Trap Zone" and a "Pro Zone".
1. What is Inducement (IDM)?
Inducement is a "Near-Term High or Low" created by Smart Money to tempt traders into entering the market early.
Banks need liquidity. They cannot just buy at the bottom; they need sellers to sell to them.
By creating a "Fake Support" or a "First Order Block" just before the real zone, they induce early buyers.
When these buyers put their Stop Losses just below the fake zone, they create a Pool of Liquidity exactly where the Banks want to buy.
The Rule: If there is no liquidity sweep before your Order Block, the Order Block is the liquidity. It will be swept.
2. Identifying Valid vs. Trap Order Blocks
Not all Order Blocks are created equal.
The Trap (Inducement):
This is usually the First Pullback after a Break of Structure (BOS). It looks perfect, but it hasn't taken any internal liquidity.
Result: It usually gives a small reaction (bounce) to trap more buyers, then fails.
The Valid Zone (Extreme):
This is the Extreme Order Block located at the very bottom (for buys) or top (for sells) of the move.
Result: This zone is protected. Price creates the Inducement specifically to fuel the move from this Extreme zone.
3. The "IDM" Structural Mapping
To find the real trade, you must map your structure differently.
- Find the BOS: Identify the break of structure.
- Find the First Pullback: Look at the first Low (in an uptrend) created after the break. Mark this as IDM.
- Wait for the Sweep: Do NOT buy at the IDM. Wait for price to break below the IDM.
- Look Below: Once IDM is broken, look for the first unmitigated Order Block or FVG below it.
4. Strategy: Trading the "Sweep & Go"
We only enter after the trap has been sprung.
The Setup:
- Identify the trend is Bullish.
- Wait for price to retrace.
- Let price smash through the first support level (Inducement).
- Watch price tap into the Extreme Demand Zone.
- Entry: Buy the rejection of the Extreme Zone.
- Stop Loss: Below the Extreme Low.
- Target: The Weak High (External Liquidity).
5. Engineering Liquidity (When there is no IDM)
What if price shoots up without creating a pullback (Inducement)?
Danger.
If there is no Inducement, the market will likely create one.
It will form "Equal Lows" or a "Trendline" above your Point of Interest.
Do not trade yet. Wait for those Equal Lows to be swept. That sweep creates the liquidity needed for the move.
6. Timeframes
Inducement exists on every timeframe.
- Swing Traders: Look for H4 Inducement to be swept before the Daily trend continues.
- Day Traders: Look for M15 Inducement to be swept before the H1 trend continues.
Final Thoughts
Inducement is the difference between "Gambling" and "Trading".
Gamblers jump at the first sign of movement. Traders wait for the trap to be sprung.
Always ask yourself: "Where is the trap?" If you can't see the liquidity, YOU are the liquidity.
Understand the bigger liquidity picture: Liquidity Grabs (BSL/SSL) Explained