Home Trading Strategies How To Avoid False Breakout And Profit From Trapped Traders

How To Avoid False Breakout And Profit From Trapped Traders

How To Avoid False Breakout And Profit From Trapped Traders

hey hey what my friend in today’s video you’ll discover how to identify false breakouts and profit from trip traders here’s what you look right number one what is a breakout we’ll talk about what’s a break out the two types of breakouts then you must know number two what enticed traders to buy breakouts this is important because if you want to profit right from trip traders if you’re not profit from false breakout you have to understand right what makes this type of breakup traders want to buy what gets them excited what gets them you know clicking to buy or sell button what is it right so we’re going to talk about what entice traders to buy breakout number three when we’ll break up traders get trip when will break up traders realize ah I’m in the raid market reverse gives me off we’re going to talk about that right when that happens okay and number four how do you profit from trap traders so all this and more in today’s video so but first right if you’re watching this video for the first time hit the thumbs up button and subscribe to my youtube channel the link is below it button is below click subscribe and this way whenever I publish a new video you’ll always be updated sounds good let’s get started number one what is a breakout so when we talk about breakups generally there are two types of breakup okay a breakout right it occurs when the price exceeds a key level that’s kind of like the general definition but in essence right there’s really two two ways right a market can break out it can break out of a range okay so for example this one is the range market breaks out of resistance breaks out of a range or the market can break out of a swing high or swing low so for example let’s say market is already in an uptrend market can break above right this swing high right this swing high so this is what we call a break off a swing high okay so there are two ways a market can break out generally number two what entice traders to trade breakout this is important right because if you want to identify false breakout if you have you know profit from this type of you know false breakout you have to understand what makes traders buy a breaker and treat us right all right I’m sure you can agree with me right now you would like to buy break out when the market is moving fast when the Kendal’s is big its bullish and a strong momentum when the chat screams buy me buy me buy me that’s when you will probably buy a break up okay this is like psychological when you see huge bullish candles when you see the price right breaking new highs every single day deep inside your heart you know there’s this voice saying buy me buy me buy me but wait it’s buy me right up so let me just give you an example of what I mean by that so if you look at this chart over here okay look at this strong big bullish move many traders who look at this and say oh there’s a break out of this highs time to go a long time to mine look at huge bullish momentum right look at a huge bullish momentum look at the size of the candle right this breakout is strong all right I’m just going to the moon right that’s the the top process right there many traders will have and there will end times many traders to jump the gun and buy the break-up so you can see another one over here at this point you can imagine right before this became a shooting star this candle was actually very bullish she was actually looking something like this right previously nice green candle breaking out of the house breaking her out of resistance and trader so look oh man look at this this move right the breakout is real look at the range of the candles look at the strong momentum so okay so now let me get my point right this is what entice breakout traders to trade breakouts this is important right because if you want to profit from this group of traders we can’t trap the breakout traders you have to be aware of this of what gets them excited okay and the reason why you know traders trade break out in this manner is because of the fear of missing audio don’t miss the move Friday don’t want do you know to see the market take off without them and oh make them feel like a fool so this fear of missing out right will cause traders to buy breakouts when the market is moving fast number three when will breakout traders get trapped raaaah this is the question right when will breakup treatise get trip so clearly you know that they buy when the market is moving fast when the range of the candles is large when it breaks above resistance for example anything that oh man the it is going to the moon right and he go along and annex Kendall the market does 180-degree reversal and closes down below resistance anyway what hey what’s up with it I thought the market is going to the moon right wait wait Enterprise from first okay that’s way you know traders take a trip when you buy a breakup when you think oh man I’m gonna go just make a quick gain right on this market and I’m off and I’m out of the trade I won’t be greedy when you do that the market does a sudden reversal you couldn’t even capture any quick games right before you know it you’re in the rip this way you know that break up traders their trip okay so it’s usually in the form of a strong reversal pattern in the opposite direction so you can imagine it if the price you know makes it on strong bullish momentum breaking up new highs every single day and on the reversal day is a bearish candle a strong reversal lower okay let me give you an example look at this this we have a nice strong momentum coming to this resistance and you can imagine and this candle it before it became a bearish engulfing pattern at one point it was actually a bullish candle the price was trading near this highs over here so you can imagine that Kendall was actually very bullish breaking out of resistance and traders would take all and this this reversal is is for real right the market is gonna reverse this entire downtrend time to buy any coal long and when do they get trapped when the price makes a sudden reversal towards the downside so you can see that this is a sudden reversal towards the downside right closing near the lows inward breaking below the lows of the previous day you know where this point traders to buy the highs of year who buy the breakout of resistance they are now trapped they are in the rate they’re suffering they’re in pain okay so this is what I mean by identifying you know when breakups trader get trip another example let me share with you this one here okay so if you look at this over here again market is in a downtrend okay then notice that there is this strong bearish momentum towards the down side entry does a little bit oh man the prices in a downtrend time to sell my name notice this there’s a strong bearish candle lower and they tell them separate if the price if the price breaks below the swing low I am going short I am going short and what happens right the market at one point in time it did it did a tree near this Lowe’s over here so I can imagine that this is actually a red candle a bearish red candle and within the day it reverse and closes up near this house so you can imagine if a trader were to shut this swing low if they were to shut the brake down now they are trapping the market makes such a strong ready reversing right towards the upside okay so I will talk about this later on right even though this is a false breakout but it’s a false breakout that I don’t want to train I’ll explain why later on okay and just to share with you one more example okay so this is kind of similar to the one that you saw earlier on the pound dollar again look at this very nice strong bullish move at one point in time this candle this candle is actually a bullish candle right is breaking out of resistance and then what happened within the reverse and closes near the lows now trade oh so by to break up the our trap okay so I’m going to talk about this all right specific how you can actually treat this false breakout coming up soon so now you know right when breakup traders they get trip so moving it on by the way right if you’re enjoying this video so far hit the thumbs up button if you’re not enjoying this video hit the subscribe button so I can convince you right in future right that this my content is good right so do it right now so how do you actually profit from crap traders so now you’ve learned a few things right number one you want to look for a strong momentum move into a key level because you you know right there the bigger the momentum the bigger the range of the candles that’s where it’s gonna entice more breakout traders to buy the briefer this way it gets them excited okay first thing second thing right wait for a strong price reversal and enter on the next candle open so you want to see the candle let’s say we are looking to short you on this year strong big bullish move coming into resistance a key level and then right suddenly out of the blue the market makes a higher 80 degree reversal and closes near the lows right there the reversal candle usually the range right is pretty large as well that’s why you want to look for a strong price reversal begins against the strong momentum now matryona second stops away from market structure and number four okay from a swing trading standpoint you wanna take at the nearest swing high or low so I’ll share with you a few examples I saw you you know how we can actually profit from CREP traders so first thing first okay let’s talk about diamond since since we are at Ozzy and right why don’t we just continue with this so again right notice that strong momentum move coming to this area of resistance okay we are not looking too short on a bullish candle where we want to let the price tell us that hey you know the sellers have come in and take control and that’s where we enter the trade so at this point we have a strong bearish reversal pattern towards the downside so we are familiar with candlestick patterns like you know shooting star engulfing pattern this is the type of patterns that you want to look for the larger it is alright the stronger the price rejection the better so at this point you have a sudden reversal and where you want to enter the trade right it’s on the next candle open so this is where they can doe open over here I’d open at this price and if you recover I mentioned that you want to set your stop loss right a distance away from this heist or you don’t have just said it’s make above here because what a market can do is it forms somewhat of a double top right like it goes down spike up higher double top it comes down lower so if you set your stop-loss just above the signs it’s asking for trouble or is asking to get stopped out even before the market can move in your favor so I’m going to share with you a technique on what you can do about it right what you want to do is get an indicator out lightly Average True Range I completely use a twenty period and I use the SMA so it’s really up to you you know what what settings you wanna use okay at this point the ATR is about 50 pips right if you look at the value it’s about 50 pips so what you’re gonna do is find out what’s this value over here let’s say the value it’s a $76 $76 and 20 cents you plus 50 pips right this this one so you can’t stop loss of $76 N 80 cents okay 7680 okay so that’s your stop-loss 7680 so which is pretty much one ATR above this highs okay so that’s what I mean by setting your stop-loss above market structure and finally right you want to exit your trick before opposing pressure comes in so that’s where I mentioned that you want to exceed your trader you know swing high and swing low okay so this is just very basic treatment it’s when you can get a little bit more complex and fancy later on but I’m just just one little bring to you the general idea for before we in future videos we can talk about more complex stuff so the swing low clearly is at this point over here okay and you do want to be setting as your target right smack at this loss why is that because you have to understand that swing high swing low support resistance there are areas on your chart they are not lying on your chart this means right if that support is an area the price might come near support and then reverse from it the price might exceed support and then reverse from it so it becomes an area so there is a possibility where the price comes near support but that’s not touch the exact line and then reverse from it and you don’t want that to happen where the price is so near your TP is so near your take profit level and then in reverse against you because you are too greedy hunting for the next two or three additional pipsy you donate to happen Rangi give the market nono some breathing room right – – for you – TP okay so usually I set it a distance out it and the conservative level at supports or somewhere about here okay somewhere about here you can set your TP level okay and in this case right the market did over around right massive your emotions right now you’re gonna get stopped up before you finally know we just the TP level okay so this is Aussie yen right one example of a false breakout I want to talk about the dollar yen as well right so there was something that I think I mentioned earlier why I am NOT looking to to trade this if you look at this a dollar and this is the false breakout over here I noticed at the price it uh trigger below this lows and it closes near its highs but I’m not looking to buy this false breakout why is that right because this relates right to the earlier point that I was trying to make where I said that you know you wanna take profit at the nearest swing high or low so if you look at this right the nearest swing high is actually at this point over here so if you were to buy at this point you can see that your potential reward is just from here to here it’s really not much meat left in the move and if you’re gonna set your stop loss 180 are below this low let’s say somewhere here you can see that your distance of your stop-loss is this all right let’s call this SL that is your distance and your reward is just here for Marissa story what standpoint it’s not very attractive if you ask me so this is this is why even though it’s a it’s a false brick setup but it’s a setup that I don’t one two three so whenever you treat a Falls a brick set up you wanna assess right how much am i risking all right your potential risk and how much is the potential profit where the price could move right before it hits its first target or how much the price could move right before you encounters opposing pressure so most traders they generally look for one to one before me uh I get a 1 to 0.

8 right I’m perfectly fine with it okay so this is another one dollar yen all right it’s a it’s it would have been a winning trade but it’s a trader I clearly wouldn’t have take okay one more example a pound dollar okay so this was the one day we spoke about earlier so this is very similar to the Aussie yen ones you can see that again I’m just gonna be fast with this strong bullish move into this area of resistance and one point in time this candle is very bullish traders who think oh man this breakout is real right price was nearly highs and then within the date closes near the lows this now this traders who buy to break up their trap right so you can actually go shot potential targets is at this level this is where you know buying pressure could potentially come in right in this area of a support or swing low okay again stops are 180 are above the highs so in this case a really matter whether it’s a winning or losing trade at Indy the concept I’m trying to teach you it’s more important and another one right to share with you are it’s a losing trade but again it’s a setup that uh is a valid set up even though it’s a losing trade so this is a little bit different in terms of defaults breakout so in the earlier examples you saw that the false breakup occurs within the same candle but sometimes right the market takes time to play or it could you know consolidate consolidate a wall for in a level before you reverse in this case you can see that you Rosie at this area of support right noticed this strong down move lower how big and bearish the candle is or how price you know break below this swing low or support and traders they or men look at how bearish this market is time to go shot and indigo shot then what happen interestingly is mixed view candles market consolidate Kay consolidate and the for candle it breaks and closes higher so now this to me is a false breakout this for candles if you look at it as a context as a for candles together this tells you that market solid it undecided and in the booth step into controlling clothes near the highs so this is the false breakout a false breakout of this this loose okay so this is a set up right there let’s set up to go long again stops right away from market structure and you want to ask yourself right where my opposing pressure coming and if you ask me I’ll say somewhere about here and even here okay in this case right a price clearly just you know when the kids to you probably get stopped out on this move and then it reverse and probably would have you know keep your targets but say that’s trading and I just wanna you know be honest and upfront about this okay so hopefully these few examples over here I give you a good example to you know how to identify false breakout and profit from trip traders so sometimes are you profit from the trip trader sometimes you get trapped and you take profit from you right it happens okay so you have to kind of embrace this so some quick bonus tips for you before we end right so number one you want to trade off obvious levels I like to look at obvious levels that you know sticks out in front of your face why is there simple right when you trade off obvious levels right it can be seen on a higher time frame in on top of it right it will attract more order flow to it in other words it will attract more traders to it right moderators take notice of the level they would be more attracted to it and you know more orders will be around it maybe trade us to buy break up maybe trade us to create a reversal so when there’s more orders around it right the the the volatility of the market D the impact of the move right is usually larger when there’s more attraction to it right so we can expect a bigger move okay so this is why you want trade obvious levels number two right you want to see big bold candles approaching the level I think this is a concept that I’ve been hammering home throughout this whole video you want to see a strong move into a level that’s what attract traders to chase the market to buy the break up because you have the fear of missing out so when you trick false breakout you want to see this big bull candles approaching a level number three you want to see a strong reversal pattern then I put break at 1.

5 ATR so what this means right is that when the market makes a reversal right if you want to define right what is the strong reversal you can make sure I may be reversal pattern is at least one point five times ATR so for example gain room just do a quick one let’s say let’s go to the this one over here let’s say this Aussie era it is a reversal candle but you’re not sure whether is this a strong reversal or just a normal one so what you can do is again pull up the ATR indicator okay I’m not gonna change the settings on you know my default settings I use is 20 and SME my you know just not gonna do it so let’s say the ATR is about 50 pips right let me make my life easier let’s say the current ATR value is 50 pips so you want to if you want to find out whether the reversal pattern is it a strong one you wanna make sure it cell is 1.

5 ATR okay so if the ATR right now is 50 pips right so 1.58 here is 1.5 times 50 to 75 pips so what you do is find out write the range of this reversal pattern from the highs to the lows right is it at least 75 pips if it’s at least 75 pips are then you can say that hey no this is a pretty strong reversal pattern right so 1.

5 ATR is like a kind of a guideline that you can use okay and uh next one the further away opposing pressure is the better so again this brings back to the concept of you know what is your potential risk to reward so you saw earlier the dollar yen example the opposing pressure is very near your entry there’s not much left in the move right so you don’t want those type of trades you want rates where the opposing pressure right it’s far away from your entry this means that the market right the price has more leeway to route to move right before reaching your target so this is why I say that the further away opposing pressure is the better okay so with that setup if you wanna learn more if you really enjoyed this video you’ll learn more about price action trading false breakout and stuff like that go down to my website trading with Rainer comm links above your trading with red oak um and scroll down there’s this guy called the ultimate guide to price action trading we will talk about more in-depth stuff support resistance candlestick patterns and much more so click this orange button and I’ll send it to your email address for free so with that said I have come towards the end of this video enjoyed it give me a thumbs up subscribe to my youtube channel button is below and I will talk to you soon you


Please enter your comment!
Please enter your name here