False Breakout Patterns Trading Strategy

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False Breakout Patterns Trading Strategy
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Let's look at false or failed breakouts - what they are, how to avoid them, how to avoid their risks, and how to profit from them. We can help you learn how to trade false breakout patterns.

. 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.Don’t jump in too early when you are trading a breakout. Wait for the price to confirm or reject the breakout.The price will decisively return to the support or resistance it broke, and then cross back to the area from where the breakout originated.

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