Demand Zone Rejection vs. Trendline Breakout

📚 Trading Education:

Demand Zone Rejection vs. Trendline Breakout Entries

In trading, where you enter makes a massive difference in your Risk-to-Reward (RR) ratio. Two common approaches:

🔹 Scenario 1: Entry at the Trendline Breakout

Wait for confirmation → price breaks the downtrend line.

Entry: $5.14

Stop Loss: $4.65 (below demand)

Risk: 0.49

Target: $8.74

Reward: 3.60

RR = ~1:7.3

✅ Higher probability (confirmation from breakout).
❌ Smaller RR because you’re entering later.

🔹 Scenario 2: Entry at the Demand Zone Rejection

Enter aggressively on the first demand zone bounce.

Entry: $4.85

Stop Loss: $4.65

Risk: 0.20

Target: $3.90 upside → $8.74

Reward: 3.90

RR = ~1:19.5

✅ Insane RR potential.
❌ Higher risk of fakeouts (price might pierce deeper before breakout).

The Takeaway

Breakout Entry = safer, confirmed, good RR (~1:7).

Demand Rejection Entry = aggressive, riskier, but monster RR (~1:19).

👉 The best traders scale in: small position at demand, add on breakout. That way you capture the high RR edge while also waiting for confirmation.

⚖️ Risk Management Rule

Always risk just 1–3% of account equity.

Huge RR setups don’t mean overleveraging — stick to risk discipline.

"Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble." – Warren Buffett