The Forex Market’s Best-Kept Secrets: How ‘Depth of Market’ and the ‘Abandoned Baby’ Pattern Can Give You the Edge

The Art of Seeing Beyond the Candlestick

Ever feel like the Forex market is one big magic show, with institutions pulling off sleight-of-hand tricks while retail traders are left wondering where their money vanished? You’re not alone. But what if I told you that two lesser-known trading concepts—Depth of Market (DOM) and the Abandoned Baby candlestick pattern—could give you an almost unfair advantage? These aren’t your everyday indicators; they’re your backstage pass to seeing what’s really happening behind the price movements.

Let’s dive into these game-changing techniques and how they can help you sidestep the common traps most traders fall into.

Depth of Market: The Institutional X-Ray Vision

What Is Depth of Market (DOM)?

Imagine you’re at an auction for rare sneakers. The higher the demand, the fiercer the bidding war. The same logic applies to the Forex market. Depth of Market (DOM) shows the buy and sell orders waiting to be executed at different price levels. This tool lets you see the liquidity behind a currency pair—something most traders overlook.

Why Most Traders Ignore It (And Why You Shouldn’t)

Many traders rely solely on price charts, assuming that candles tell the whole story. That’s like judging a restaurant’s quality based on its Instagram photos—sure, it looks good, but what’s really cooking behind the scenes? DOM exposes where the real buying and selling pressure lies, helping you avoid false breakouts and manipulative price movements.

How to Use DOM Like a Pro

1. Spot Fake Breakouts – If a breakout happens with weak buy/sell orders behind it, chances are it’s a trap. Institutions often lure retail traders in before reversing the price.
2. Find Strong Support & Resistance Levels – Large order clusters often indicate areas where big players plan to enter or exit.
3. Trade With Institutional Flow – If you see an imbalance of orders, you can position yourself before the big moves happen.

Pro Tip: Combine DOM with price action to confirm signals. If an Abandoned Baby pattern forms at a level with high liquidity on DOM, you’ve got a powerful confluence.

The Abandoned Baby: Spotting Reversals Before They Happen

What Is the Abandoned Baby Pattern?

The Abandoned Baby is a rare but powerful candlestick reversal pattern that signals a market turning point. It consists of three candles:

1. A strong bullish/bearish candle
2. A small doji (gap-separated from the first candle)
3. A strong candle in the opposite direction

The “baby” (doji) is left stranded between two strong candles, symbolizing market hesitation and an impending reversal.

Why Most Traders Miss It

Because this pattern is rare, many traders overlook it. But that’s a good thing—rarity means higher reliability when it does appear. Unlike basic reversal patterns that retail traders crowd into, the Abandoned Baby often signals moves that institutions are making in stealth mode.

How to Trade the Abandoned Baby Like an Elite Trader

1. Identify It on Higher Timeframes – The pattern is most effective on the 4-hour and daily charts.
2. Check Depth of Market (DOM) for Confluence – If liquidity is drying up near the Abandoned Baby, institutions might be preparing for a reversal.
3. Use Smart Stop-Loss Placement – Place your stop-loss just beyond the second candle to protect against fakeouts.

Underground Strategy: The Abandoned Baby + DOM Combo

Want to supercharge this pattern? Here’s the ninja move: Look for an Abandoned Baby forming at a liquidity zone on DOM. This means institutions are likely shifting their positions—giving you an early clue before the market turns.

Case Study: When the Abandoned Baby Cried (and Made Traders Rich)

In April 2023, USD/JPY was in a strong uptrend when an Abandoned Baby formed on the daily chart at a key resistance level. At the same time, DOM showed a sudden lack of buy orders above that level, signaling that institutions were pulling liquidity. The result? A 500-pip drop over the next two weeks—and those who understood the pattern made a fortune.

Why Most Traders Lose Money (and How to Be in the 10% Who Win)

Most traders are obsessed with finding the perfect indicator, but the reality is: real trading edges come from understanding market psychology and liquidity. DOM and the Abandoned Baby pattern give you insights that most traders never even consider.

Summary of Elite Tactics

✅ Use Depth of Market to see where real buying and selling pressure lies.

✅ Spot Abandoned Baby patterns on higher timeframes for reliable reversals.

✅ Combine both strategies to trade before institutional moves happen.

✅ Avoid common retail trader traps by focusing on liquidity, not just price action.

Next Steps: Take Your Trading to the Next Level

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Image Credits: Cover image at the top is AI-generated