---
title: 'What Is Inducement in Trading? Smart Money Concepts Explained'
source: 'https://youtube.com/watch?v=-GkOTMYoJT4'
video_id: '-GkOTMYoJT4'
date: 2026-07-12
duration_sec: 499
---

# What Is Inducement in Trading? Smart Money Concepts Explained

> Source: [What Is Inducement in Trading? Smart Money Concepts Explained](https://youtube.com/watch?v=-GkOTMYoJT4)

## Summary

This video explains the concept of inducement in trading, where price movements are engineered to trigger stops or attract breakout traders before reversing. The presenter uses diagrams and real chart examples from the S&P 500 and NQ to illustrate how smart money uses inducement to enter positions.

### Key Points

- **Definition of Inducement** [00:14] — Inducement is a move that induces buyers or sellers into the market. For example, a breakout above a high attracts breakout buyers and triggers buy stops from shorts, allowing smart money to sell short.
- **Accumulation, Manipulation, Distribution** [00:40] — In bullish order flow, the pattern is accumulation (buying), manipulation (inducement to trigger stops), then distribution (selling). In bearish order flow, the opposite occurs.
- **Trading Rules for Order Flow** [01:12] — With bearish order flow, look for highs to be ran to position short. With bullish order flow, look for lows to be ran to position long. Setups should occur within PD arrays (premium/discount arrays).
- **Example 1: S&P 5-Minute Chart** [02:10] — After a downtrend, price fails to close below a low, breaks a high (structure shift), then runs a low (inducement) before expanding upward. The setup involves positioning with a stop at the high and partial at the low.
- **Example 2: S&P 15-Minute Chart** [03:49] — After an aggressive move down and back up with overlapping FVGs, price runs a low within a PD array, fills a fair value gap, then expands higher. Favorite setups are when price barely reaches into the PD array.
- **Example 3: NQ 5-Minute Chart** [05:15] — After a strong impulsive move up, price fails to close above a high, retests the old high, then moves down aggressively. A low sitting within a fair value gap is taken before an expansion higher.
- **Example 4: 4-Hour Chart** [06:14] — Price runs a previous low, closes back into range, then displaces. A low is put in, swept, then continuation higher. Another low leads to a move up towards buy side.
- **Using Inducement in Trending Markets** [07:27] — In an uptrend, look for lows to be ran to gain entry. Multiple entries can occur as price respects old lows. Key is how closes respect these old lows.

### Conclusion

Inducement is a key concept for understanding smart money moves. By identifying when price runs highs or lows to trigger stops, traders can align with the institutional order flow for better entries.

## Transcript

foreign [Music] how's it going everyone this video is going to be over inducement first thing
go into some examples inducement is essentially a move that induces buyers or sellers into the market so for example right here it looks as if we are
gaining support and we are going to break over this High the people who are breakout buyers will be buying right here similarly anyone short in here will have their buy stops resting above here so we have willing participants buying
above These Eyes this is where smart money sells short for the move lower another way to think about this is this is our accumulation this is our manipulation and this is our distribution with bullish order flow it
looks as if we've hit resistance and so when we break this low break out sellers enter the market as well as people who are long in here get stopped out this is where smart money buys or the move higher so just like over on this side we
have our accumulation a manipulation and then our distribution so simply put with bearish order flow I'm looking for highest vram to position short and with bullish order flow I'm looking for lows to be ran to position
long so looking at the second diagram if the trend is down or order flow is bearish I'm looking for short setups above previous highs once I hit the higher time frame PD array I'm looking for the inducement that occurs at the
Smart money reversal order flow is bullish I am then looking for long setups below lows so for example these deviations from the range are where I am hunting setups the last thing that I will mention is I prefer these to occur
within PD arrays so we have an inducement into a PD array and then a move higher and we will get into some examples for that for our first example we have s p five minute chart up and we are currently trending down
as we continue here what we notice is a failure to close below is low we have this high right here if we break this High we will shift structure upward
and there we go we get our Market structure shift and from here what do we now let's see what happens
you can see how price respected this fair value up the consequent encroachment of it as well as this order block now if we let this continue to before price continues up and takes this High what it does is it Engineers more
by size liquidity right here it then runs down and sweeps this low this is the inducement right here before then expanding upwards
so what would it look like if I was going to take this inducement setup well let's go ahead and Rewind that two here and what I do is I position myself if my stop where it normally would be partial at this high
so if we let this play out again you'll see how that works tweaking a quick look at the diagram I made for this price action here you can see once order flow becomes bullish right here after the structure shift I
then look for a load to be ran before going higher for the next example here we have the 15-minute chart for the S P 500 and what do we have we have an aggressive move down an aggressive move
back up with overlapping for Value gaps now what happens when we play this ahead so you can see a nice stop run right here as we can
close back we reach back into this fair value Gap what do we do now we reach back up we can't close over within a PD array a low
right there we take this low completely fill in this fair value Gap our current buy side and this high
and then we get a nice expansion move higher so if we look at this diagram right here we had a low napd array which was then taken prior to the actual move my favorite setups are when price barely reaches into this PD array as it did
here or if we have equilibrium of the range price did not yet reach into an equilibrium or a discount and it just puts a low right there that is what I like to see our next example is on enqueue five minute chart so if you look
right here we have a strong impulsive move up however I am expecting a we come up cannot close over this high and then get
an aggressive move down you can see it retests the old High and then continues lower
now what I look for here is we have an old load right here and where is that low sitting within a fair value Gap so watching these next candles
we can see we struggle to close lower and from here I'd want to see an expansion higher
and there we go we go take this current High for this next example we are going to go out to the four hour chart as you can see right here we ran this previous low closed back into the range and then we
got a displacement move here now if you notice here we have a fair and price putting in a low here as we let this continue forward
we get a move below that low no closes below it and then a continuation higher and let's continue there's a fair value Gap and then here is another low
and we are struggling to reach higher so we're likely to draw lower towards this low hope you notice struggling to reach lower especially with the strong close
right here so I would then want to see price reach up towards buy side and there we go so that is an example of one two
inducement Moves In This price leg last thing I'm going to go over is how I use this in trending markets this is very similar to my displacement versus lack but when we are trending up I want to look for lows to be ran to gain entry
here we ran a low and then here we are in a low so in just this section right here there are three possible entries if you notice how these closes respect
these old lows that is the key I hope you enjoyed this video if you did please consider giving it a like and subscribing and I hope you have a great rest of your day see ya
foreign