Many traders aren’t aware that most of price breaking moves are „false breaks”( especially break against current trend) – meaning that price after making break starts moving in opposite direction. Sometimes it can be only price retracement but even though it can trigger tight stop loss orders and change small price retracement into a false break.
How to increase your chances to succeed trading false breaks?
1. View the situation in a wide perspective.
2. Identify trend in higher time frames – most false breaks are against trend
3. Analyze price levels with price canals, trend lines
Why there are false break after all? The old trader’s saying can give us a hint: "Bulls make money, bears make money, but pigs just get slaughtered!". What does it have to do with false breaks? Pigs are considered amateur traders which usually trad…