Lesson 20 of 20 · 8 min

Displacement

Step 1

What it is

Displacement is a forceful move: several candles with bodies much larger than recent ones, small wicks and a clear break from the recent range. It looks different from normal back-and-forth trading.

It matters because many of the other concepts here depend on it. Fair value gaps, order blocks and shifts all mean far less without a strong move behind them.

Traders use it to separate a move with force from a noisy drift. It does not tell you the move will continue. It only tells you that this move was unusually strong.

Step 2

See it on a chart

A noisy candle, then a real break out of the range.

Illustrative chart with made-up prices and tick volume, built for teaching. It is not real market data and not a trade idea.

Step 3

The exact rules

What must be true before entry

Candle bodies at least twice the size of the recent average.
Small wicks, showing little pushback.
A close beyond the recent range.

What volume should show

Real displacement should show volume well above the recent average. Big candles on thin volume, often in quiet hours, carry much less weight.

Where to enter

On the pullback into the half of the move nearest its start. Never during the candles themselves.

Where the hard stop goes

A hard stop past the range the move came from.

Where the target goes

Aim for a clear objective that offers at least 3:1. If the nearest realistic objective gives you less, there is no trade.

What invalidates the idea

Price returns into the range the move came from.
The next few candles reverse the entire move.

When not to take it

The move came from a news release, when spreads and slippage can be severe.
No pullback comes. Let it go.
You have just taken a loss and feel the need to win it back.

Step 4

Your turn: plan the trade

A forceful move down has broken out of the range, and price has pulled back. Mark your plan.

This setup is a short. Look at the candles and the volume. Choose a line below, then tap the chart to place it. You can also drag its label or type a price.

Illustrative chart with made-up prices and tick volume, built for teaching. It is not real market data and not a trade idea.

Step 5

The trap: fear of missing out

A big candle is exciting, and every second it runs feels like money you are missing. That is the worst moment to act: your stop would be far away and your reward small. If it feels urgent, step away from the screen. There will always be another setup.

Read about screen time

Step 6

Write it down

Keep going

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