Retail traders lose huge money due to fake breakouts, how to identify them and get benefited out of it?
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Retail traders lose huge money due to fake breakouts, how to identify them and get benefited out of it?
Break out trades are the most excited trades for the beginners. First let us understand what is a break out trade. Taking a trade whenever the stock/ index breaks the important levels like Support, Resistance, Previous Day High, Previous Day Low, etc., is called as a breakout trade.
As per the back tested data around 30-40 percent breakouts are fake. Fake breakouts are nothing but the price manipulation by the big investors.
Retail traders are the people who got trapped in the fake breakouts. So, how to identify the fake breakouts?
Following are the signs to identify the high probability breakouts.
Consider the breakouts if they meet at least the above parameters. Avoid parabolic breakouts, most of the times it reverses immediately.
5 Indications that determines the Fake Breakouts
Here are a few indications that show the difference between fake and real breakout.
If you follow the above rules before taking a breakout trading, you will easily identify the fake breakouts.