---
title: 'Divergence: The Market Maker''s Trap'
source: 'https://youtube.com/watch?v=99Qy0SSI1Uw'
video_id: '99Qy0SSI1Uw'
date: 2026-08-04
duration_sec: 720
---

# Divergence: The Market Maker's Trap

> Source: [Divergence: The Market Maker's Trap](https://youtube.com/watch?v=99Qy0SSI1Uw)

## Summary

This video analyzes the concept of divergence in trading, arguing that it is a trap set by market makers. The presenter explains that while retail traders use divergence as a buy or sell signal, smart money uses it to lure the masses into wrong positions, creating liquidity for their own trades. The video advocates for a deeper understanding of market mechanics, focusing on liquidity and balance rather than indicators.

### Key Points

- **Market Maker Trap and False Divergence** [00:02] — The video introduces the topic of market maker traps and false divergence, suggesting that most traders rely on indicators without understanding the real reasons behind price movements.
- **Indicators vs. Liquidity** [00:17] — Price moves due to liquidity and rebalancing, not because indicators show oversold or overbought conditions. Indicators are based on historical data and do not predict future liquidity.
- **Divergence Definition** [01:17] — Divergence is a discrepancy between price and an indicator. A divergence at the top is bearish, at the bottom is bullish. Classic bullish divergence: lower low on price, higher low on indicator.
- **Retail Trader Signals** [02:13] — Retail traders use divergence as a buy/sell signal without understanding pricing. This is based on teachings from books and courses, like the four conditions: overbought with bearish divergence for short, oversold with bullish divergence for long.
- **95% Unprofitable** [02:44] — If it were that simple, everyone would make money, but over 95% of traders are unprofitable. Divergence can be used to assess mass sentiment.
- **Divergence as Mass Sentiment** [03:01] — For the masses, a bullish divergence is a strong buy signal, but for smart money, it's a sign that a correction may begin. The price will seek liquidity for buying and fill bearish balance.
- **Hidden Divergence** [03:46] — Hidden divergence occurs when price makes a higher high but indicator makes a lower high (in an uptrend) or vice versa. It indicates trend continuation.
- **Using Divergence in Bearish Market** [04:25] — In a bearish market, a classic bullish divergence appears before a correction, luring traders to buy. Then a hidden divergence may form, confirming the downtrend continuation, and you can open a short position.
- **Market Makers' Perspective** [05:32] — Market makers understand the thought processes of retail traders. They entice the masses to open positions in the wrong direction, creating liquidity for themselves.
- **Example of Trap** [06:28] — Price consolidates near an old maximum, forming a double top with bearish divergence. Retail traders short, but the price breaks above, trapping them. The old high is a target for liquidity.
- **Divergence as Sentiment Indicator** [08:21] — Divergence should be used as an indicator of mass sentiment. When a classic bearish divergence appears, a short position may work for a small drop, but the main target is smart money.
- **Smart Money Focus** [09:15] — Smart money does not look at indicators; they look at where stop losses are. They remove liquidity from old highs, enticing traders to open wrong positions.
- **Rules to Remember** [10:13] — In a bull market, classic bearish divergence appears before a correction, luring traders. Hidden divergence appears before trend continuation. This pattern repeats in any market.
- **Move Away from Mass Concepts** [11:11] — To be profitable, move away from the concepts used by the masses, as 95% are unprofitable. Learn to see smart money traces on the chart.

### Conclusion

The video concludes that divergence is a tool used by market makers to trap retail traders. To succeed, traders must understand liquidity and balance, and use divergence as a sentiment indicator rather than a direct signal.

## Transcript

in this video we will analyze the market maker trap and false divergence. Most of the market trades based on indicators and cartridges simply because these are simple things that do not need to be delved into
when they open trades based on this they do not need to know anything about pricing and the real reasons why the price moves up or down. We do not focus on this when analyzing the chart and trading because the market does
not work like that. The price will not move up if the ersai shows oversold [ __ ] divergence, although this would be very simple and convenient. Violation of transactions will gradually deprive you of your deposit, and given that the masses
consider their liquidation as a stop loss, this can happen much faster. The price moves up or down only because of liquidity and to rebalance the price. Indicators are based on history, they
measure the past with certain calculations, mathematically compressing all the data, and the result would be yours. This has nothing to do with where the liquidity is and where the price will move next.
Before we continue, I recommend subscribing to my I write about trading analytics and market thoughts on my Telegram channel. You'll find a lot of useful and
trader. Follow the link in the description below the video. We'll talk about divergence. Divergence is the discrepancy in price between chart indicators. If you see a divergence at the top, it will
always be a bearish divergence. If it's at the bottom, it's considered a bullish divergence. The chart shows a classic bullish divergence. This is when a lower low forms on the chart, but
on the indicator you see a higher low. For retail traders, this is a buy signal. Traders who trade based on such signals have no thought
signals have no thought processes or knowledge about pricing. This was instilled in them through books, seminars, courses, and Bruce, who said that indicators are controlled, but that to open a trade, you need to consider the Turk's four conditions:
overbought and bearish divergence for opening a short position, and oversold with bullish divergence for opening a long position. These are the four opening a long position. These are the four conditions on which they trade.
If it were that simple, everyone would just make money. We know that more than 95 percent of traders are unprofitable. I based on the signals the indicator gives. We'll talk about how you can
use divergences to assess mass sentiment or how they think about price. When for the masses, such a divergence is a strong signal to buy, for us, it's a sign that a correction may begin here.
The price will strive for liquidity for buying and for filling the bearish balance, where a better opportunity for us to open a short position will appear. We will consider this pricing
from this side because, based on the higher timeframes, because, based on the higher timeframes, we are bearish and expect to remove the shameful barks about liquidity in the 37,000 range.
timeframe, and therefore I recommend watching it for a deeper understanding of watching it for a deeper understanding of the material. Look at the tips, we'll understand,
and so there is another hidden agency. classic one. It doesn't go beyond the limits, and I have a correction in time, that is, a logo high is formed.
But on the indicator, everything is the opposite, you will see that here  A higher high was formed, will see that here  A higher high was formed, hidden divergence. When you work with a chart with a
descending urfu, that is, you have a bearish bias based on higher timeframes, then the use of divergence will occur in this way: when a classic bullish divergence appears, when liquidity is withdrawn for
sale, the price may begin to correct upward. If this happens, then you wait for the activation of a stop loss for a purchase above the old how it is from your zone of interest. At this point, a hidden divergence may be formed,
At this point, a hidden divergence may be formed, which will give you additional confirmation that the downward price formation will continue. Here, you can consider opening a
position in a downward direction because, based on higher timeframes, because, based on higher timeframes, you expect the asset valuation to be even lower at the same time. 3 dori who opened a long position based on a classic
bullish divergence will be knocked out of the market. The logic is simple. If you have a bearish market, then classic customary divergence usually appears when a correction begins,
but hidden divergence can be  It will be seen before the continuation of downward pricing. You need to focus on it. When ritual traders look at the price, they see what they want to see. Usually, their
assumptions are based on indicators and cartridges. If they see a bullish divergence, they open a breaking position. They see an upward trend. They would do the same. Market makers, in turn, understand the
thought processes of market participants about price. They entice the masses to open positions in the wrong direction, thus creating new liquidity for themselves, thus creating new liquidity for themselves,
fill their orders. We must look at where liquidity We must look at where liquidity can be created and neutralized. To do this, we need to understand how the majority of the market thinks and do everything
absolutely the opposite in order to be profitable. Let's look at my brother-in-law's example. Here you can see that the price is consolidating near the old maximum for a larger segment of the market. It acts as a
resistance level from which it will be relevant to consider a short position. A double top with a bearish divergence was also formed.
indicate that it is necessary to short. I think many of you would do absolutely the same as the main part of the market. The part of the market. The main reason for such a mistake is  False
prioritization if you opened a short position here chart indicator and pattern, but they need balance and liquidity there is a key difference
the direction of your thought processes in the right direction you will still direction constantly getting trapped the price will not leave this maximum untaken and the balance filled with it is greater than it
because this is the primary target for an upward movement this is typical pricing before removing a significant plo liquidity for buying the price moves in the opposite direction to
use liquidity for selling to create new liquidity for buying or balance the price you saw bearish patterns divergence in the range of the old x will not at all mean that the bull market is
over if you do not take into account the context then most likely you will fall into a trap and open a position in the wrong direction divergence patterns should be used as an indicator of
mass sentiment and here when a classic bearish divergence appeared, a short position was opened and the price really began a slight drop down but ask yourself how many people
but ask yourself how many people will exit their positions before  The reversal is an insignificant part of the scalper, which is of no interest, but the funds that are the main target of smart money are guaranteed
to open positions with much more ambitious goals, trap. This is all due to the fact that the priorities in chart analysis lie on indicators and patterns. The crowd
believes in what it wants to believe. This is a myth that has nothing to do with pricing. Smart money does not look at the ersai; they are interested in where the
they are interested in where the stop loss is for buying and selling. Here you see that before removing liquidity from the old high, the price moves in a downward direction, thereby enticing traders to open
positions in the wrong direction. Liquidity for sale is removed from the short-term high and the balance
and there is no such pump. Liquidity for purchase acts as liquidity for the purchase, with the help of which the asset is assessed. For each high, traders left their stop losses, relying only on insignificant factors for the price.
Before the asset markup, you had the opportunity to open a long position. You, of course, relied on your own  When analyzing significant factors such as liquidity and [music], you may also have noticed a hidden
divergence, which confirms that the trend will confirms that the trend will continue. Let's simple rules to remember. In a bull market, a classic bearish
divergence will appear before a correction, so most of the market is lured into opening positions in the wrong direction. Naturally, not only with the help of this indicator, but this is one of the components.
You will see hidden divergence before the continuation of the upward trend. Focus on it. Such pricing is Such pricing is absolutely always repeated in any market,
and this shows phenomenal results. In both cases, which I just In both cases, which I just showed, I opened a position. You need to move as far as possible from the idea and concept that is used by
the masses simply because 95 percent of them are unprofitable. Learn from the visible part of things that a small group of traders does, which we call smart money,
leaving traces on the chart. When you gradually begin to develop more and more and see some signals and signs of smart money in the market.
liked it.  Like and comment And don't forget to subscribe to my Telegram channel. Link in the description.