What is Trap Indicator in Quantsapp?

Last Updated: 15-Jan-2024

Short Answer

Quantsapp is an online Analytics platform that provides various tools for Options and Derivatives traders. Quantsapp proprietarily provides various solutions to option traders in order to increase their profitability. One of its unique indictors is the "Trap Indicator" which helps traders identify opportunities based on the trap situations created in the markets. Discover how it can be utilized.

Detailed Answer

Uses of Quantsapp

Quantsapp is an online options analytics tool that provides various data analytics for options traders. The platform provides various other tools like Option Chain, Open Interest Analysis, Straddle Index, Trap Indicator, etc.

What is Trap Indicator?

The “Trap Indicator” in Quantsapp is a feature that predominantly indicates the trapping of Option Sellers into a “short squeeze” or a “Long squeeze.” This indicator only shows when the option sellers can get trapped if the underlying asset moves against their position. This signal only provides the probability of a trapping situation and not a confirmed signal.

This indicator provides 5 signals based on the activities of Option Sellers, which are:

  1. Signal: The signal informs the user to either go long or short buy providing the Buy or Sell signal. In this way, one can benefit from the indicator based on the data.
  1. Symbol: The symbol has the name of the stock that has to be traded. For example, if Quantsapp gives a sell signal of TATA Steel, then the symbol will denote “TATA Steel.”
  1. Signal Date: The signal date provides the data on which the system generated the signal to either buy or sell a particular stock or index.
  1. Signal Price: The signal price is the exact price at which Quantsapp generates the signal to buy or sell that stock or index. This helps to make better decisions by traders who have already have a remaining position or willing to take a fresh position based on this indicator.
  1. Return %: Quantsapp provides both the entry and exit price in this indicator. If one wants to know the exact percentage of gain or loss using this indicator, They can easily find it from the returns%. This column provides the absolute returns between the entry price and the exit price provided by the indicator. Therefore if one exits their positions early or late then the percentage might differ as shown by the indicator.

These were the five tabs within the indicator that displays all the necessary data that a trader needs to follow while trading with this indicator.

Apart from these, the Trap indicator has some other features as well. One can back-test the indicator by choosing a date and viewing all the buy and sell signals provided by the indicator. It will also show the return percentage which was achieved by following the signal. In the same way, the indicator also plots the signals on a chart of the desired underlying asset of the user.

There are two types of trap in option trading. Let’s figure out each.

  • Bull Trap

Bull trap occurs when traders think that the price of the stock will continue to rise. This assumption is based on market trends. In reality what happens is that buyers create a manipulating false sense to pressurize into buying stock which will automatically raise the price.

  • Bear Trap

Bear trap on the other hand is when the manipulators take advantage of the downward trend in the stock market. In reality, the buyers create a false alarm that stock price will not go down after a certain level and it will change. But guess what? It goes more down creating a trap.

Conclusion:

To conclude, the Trap Indicator by Quantsapp is a unique tool that not only identifies a trap situation of Option sellers but also provides a trading opportunity to profit from it. It is very straightforward to use as it provides all the necessary data as the entry and exit price. It also provides the buy or sell signal based on the data and the percentage of the total return based on the entry and exit provided. This indicator can be useful especially for Option buyers who could take a trade based on the indicator.

Tagged With: QuantsappOptions AnalyticsOptions TradingOption SellerStock Market
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