Trading breakouts is a real thing. you can turn all of that previously gained knowledge all to your advantage and turn your worst nightmares – false breakout – to your profit in a blink of an eye? How? Here are some of the ways that we are going to discuss one by one.
First, you can rely in trend lines.
Take a chart. Out a trend line onto it. Are there huge gaps between your price breakouts and the charts? If there are, that means that all of those meetings between the ‘breakouts’ and the trend line are fake and that the price is going to go together with the trend and not against it. hence – there is not going to be a breakout.
You should also pay attention to the speed pf the price. The slower the price is creeping to the trend line, the more likely it is that you should not wait for the breakout.
Respectively, the faster the price is jumping, the more likely it is that you are dealing with the horrific breakout. What does that mean? Well, that you are to implement two different trading strategies to the two different scenarios.
With the false breakouts the trade should be entered as soon as the price goes beyond the trend line. Remember – with false breakouts you trade against the seeming trend; in breakouts you trend along with the existing one.
