LION_KING_FX

US30 FAKE BREAKOUT PIN THEN DIVE

Short
CURRENCYCOM:US30   Dow Jones Industrial Average Index


A false breakout can be a trap if your emotions let you enter trades too early. Instead, it tends to work out better if you apply a lot of self-control and wait for the price to confirm whether a breakout is real or false, using the methods explained earlier within this article to make that call. You can then plan your trades intelligently based on price action.

It is very important to always trade with a stop loss. You should make sure that you place a stop loss at a point where you feel the trade will be proven wrong if the price reaches it, or even tighter than that, based upon volatility. It might feel counter-intuitive, but as the best, most profitable breakouts tend to move very quickly, using very tight stop losses in breakout trading is likely to give you a high loss rate, but a highly positive overall expectancy. A great thing about breakout trading is that the winning trades tend to produce excellent risk/reward ratios when tight stop losses are used.
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