Hello traders 📊
On this picture here you can see 3 types of breakouts. On the left side you can see breakout examples in an downtrend and on the right side, you can see examples in an uptrend.
Breakouts occur when price breaks a certain zone (support or resistance) and in many cases breakouts represent very important moment. This is usually good time to look for opportunity to trade.
First type of breakout is "strong breakout". They occur once the price breaks certain zone with a strong candle and continue to move without pullback.
Second type of breakout is "retest". Retests are very common and extremely useful. Some of the best trading opportunities are when retest occurs. This means that price went back to test previously broken zone and this is usually good place to buy or sell.
Third type of breakout is "fake-out". This is the worst scenario as price quickly goes back after a breakout. Traders usually enter after a breakout, but once fake-out occurs, traders lose as price goes back quickly to hit stop loss.
We can not know exactly when fake-out will occur, but the best way to protect your account from this is to wait for the candle to close and to avoid to trade when big news are about to release.
Have a great day!
On this picture here you can see 3 types of breakouts. On the left side you can see breakout examples in an downtrend and on the right side, you can see examples in an uptrend.
Breakouts occur when price breaks a certain zone (support or resistance) and in many cases breakouts represent very important moment. This is usually good time to look for opportunity to trade.
First type of breakout is "strong breakout". They occur once the price breaks certain zone with a strong candle and continue to move without pullback.
Second type of breakout is "retest". Retests are very common and extremely useful. Some of the best trading opportunities are when retest occurs. This means that price went back to test previously broken zone and this is usually good place to buy or sell.
Third type of breakout is "fake-out". This is the worst scenario as price quickly goes back after a breakout. Traders usually enter after a breakout, but once fake-out occurs, traders lose as price goes back quickly to hit stop loss.
We can not know exactly when fake-out will occur, but the best way to protect your account from this is to wait for the candle to close and to avoid to trade when big news are about to release.
Have a great day!