Home Trading Strategies Why Chasing Breakouts is For Losers (Do THIS Instead)

Why Chasing Breakouts is For Losers (Do THIS Instead)

Why Chasing Breakouts is For Losers (Do THIS Instead)

hey hey what’s up my friend so in today’s episode I want to talk about why you don’t want to be chasing breakouts in the market that is far for losers right do this instead so what is this thing to do so first and foremost right let me talk about why you don’t want to chase breakup so here’s the thing when the market breaks out and he moves a lot right within a short period of time and if you want to chase those type of breakouts the problem with it is that you don’t have a logical place to set your stop-loss the market has moved too fast too soon and the nearest market structure for example let’s say it’s a bullish break up the nearest market structure like you know a support or swing low it’s very far away it’s done far away interview I’m gonna have such a huge stop-loss okay you know you have to reduce the position size if not you know your your risk right would be you know out of whack alright and if you reduce your position size it’s gonna take you a very very long time before you even hit a one-to-one risk/reward ratio so usually in market conditions like this when the market has already exploded right it’s too late to enter the trade so don’t chase this type of you know market move it’s not worth it so what should you do instead well you can do a one of three things well I would say one of three things are in fact these are three possible scenarios right that you can look to trade after the machinist make a huge move number one you wait for the first pullback so what this means is that if the market breaks out okay that’s a good chance that it will stop you cannot go up forever eventually needs to take a breather you know rest a while take a break before you know making the mixer breakout so in this in this type of scenario if the market is in a strong trend you’ll notice that the price starts to consolidate forming something like a bull flag pattern however usually be careful that you know you don’t enter too early so this is where the 20-period moving average can help right you want to let the 20ma catch up with price because by the time the twin gme has caught up with the price that’s where the market has really consolidated for a while usually wow you know seven eight nine ten candles and at one time right after the market has consolidated then hey now alright it’s telling that it’s getting ready to break up higher again so what you can do is just to simply it’ll buy the breakout of the swing high so that’s the first thing you can do right wait for the first pullback number two sometimes the market right it doesn’t give you a nice tight consolidation to buy the breaker what it does is is that retrace right it retains back the previous resistance ten support so means for example you mentioned the price breaks out of resistance right it moves to move move higher and any retrace down low and retest back previous resistance than support so hey no worries right now it comes came back to your the original breakup point you can look for buying opportunities at this area right you look for stuff like you know a bullish price rejection you know hammer a bullish engulfing pattern you know stuff like that showing you that that’s the bias right about to come in and push the price higher so that’s the second way that you can treat right to let the price to retest back the breakup point or rather you know the market structure where you broke up off earlier and number three what you can do is sometimes you don’t get a pullback sometimes you don’t get a retest of you know the previous market structure instead what it does is that the market goes into a range he forms a new range okay so he can’t mention and the price it breaks out right and it forms a new range right higher above the breakup point so when it forms a new range what he can do is that you can start to identify the highs and lows of the range so if you’re bullish you’re gonna be buying near the lows of the range I can look for a simple stuff again like you know a false break set up a bullish price rejection and the lows right to get long alright and after which you’re stopped so I can just go you know a distance right below the lows of the ridge so there’s another way that you can you know look to trade trade this a market right without chasing the breakout and finally the fourth thing right which could also happen is that the market goes into a range and it doesn’t retest the lows of the range okay maybe you know you just didn’t come low enough instead if it comes near the low of the range then you bounce up higher they retrace down slightly lower bounce up higher right at this point of time you can imagine that the price is forming a something like a ascending triangle a series of higher lows coming into this new former swinging higher resistance at this point now you have a somewhat of a build up that is forming right that something that’s similar to the pullback trait that I mentioned earlier but this number is more of a longer-term consolidation and again you can look to buy the break-up of this new highs or an in anticipation of higher prices to come so you can see that you know you don’t have to chase the markets there are many things that you can do right do to catch the mixed wave of the move I think what’s important is to understand what are the possibilities that could occur and then prepare yourself for those trading opportunities sounds good okay so with that said I have come towards the end of today’s episode if you’ve enjoyed it right hit that thumbs up button subscribe to my youtube channel the button is below click subscribe and I will talk to you soon you


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