Fade the Breakout (Part 3)
Retail traders like to trade
breakouts.
The smart minority, the
institutional, more seasoned traders, prefer to fade breakouts.
The smarter forex traders take
advantage of the collective thinking of the crowd or inexperienced traders and
win at their expense. That is why trading alongside the more experienced forex
traders could be very profitable as well.
Which would you rather be part of:
the smart minority that fades breakouts or the losing majority that gets caught
in false breakouts?
"The energy of the mind is the essence of life."
By Aristotle.
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This is a real time 100% MONEY BACK GUARANTEE SYSTEM for
Serious Traders who want to generate consistent profits with the guidance of
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"I can’t change the direction of the wind, but I can
adjust my sails to always reach my destination."
By Jimmy Dean.
Fade the Breakout (Part 2)
If a support level is broken, that means that the general
price movement is downwards and people are more likely to sell than buy.
Conversely, if a resistance level is broken, then the crowd
believes that price is more likely to rally even higher and will tend to buy
rather than sell.
Independent retail forex traders have greedy mentalities.
They believe in trading in the direction of the breakout. They believe in huge
gains on huge moves. Catch the big fish, forget the small fries.
In a perfect world, this would be true. But the world is not
perfect. Frogs and princesses do not live happily ever after. What does in fact
happen is that most breakouts FAIL.
Breakouts fail simply because the smart minority has to make
money off the majority. Don’t feel so bad. The smart minority tends to be
comprised of the big players with huge accounts and buy/sell orders.
In order to sell something, there must be a buyer. However,
if everyone wants to buy above a resistance level or sell below a support
level, the market maker has to take the other side of the equation. And let us
warn you: the market maker ain’t no fool.
"Nothing is impossible, the word itself says ‘I’m
possible’."
By Audrey Hepburn.
"Start by doing what’s necessary; then do what’s
possible; and suddenly you are doing the impossible."
By Francis of Assisi.
Fade the Breakout
Fade the breakout you say? Was that
just a typo? Did you mean to say, “trade the breakout”?
Nope!
Fading breakouts simply means
trading in the opposite direction of the breakout.
Fading breakouts = trading false
breakouts.
You would fade a breakout if you
believe that a breakout from a support or resistance level is false and unable
to keep moving in the same direction.
In cases in which the support or
resistance level broken is significant, fading breakouts may prove to be
smarter than trading the breakout.
Keep in mind that fading breakouts
is a great short-term strategy. Breakouts tend to fail at the first few
attempts but may succeed eventually.
REPEAT: Fading breakouts is a great
short-term strategy. It is NOT a great one to use for longer term traders.
By learning trade false breakouts,
also known as fakeouts, you can avoid getting whipsawed.
Trading breakouts appeal to many
forex traders. Why?
Support and resistance levels are
supposed to be price floors and ceilings. If these levels are broken, one would
expect for price to continue in the same direction as the breakage.
"Hope is a waking dream."
By Aristotle.
.
Resistance Levels
Resistance levels are just like support levels but work in
the opposite way. They tend to halt or even reverse uptrends.
Resistance levels are areas in which selling pressure is
just enough to overcome buying pressure and force price back down.
Strong resistance levels are more like to hold up even if
price breaks the resistance level and it provides traders a good selling
opportunity.
In the next section, we will dive deeper into fakeouts and
discuss why we should trade them and how to profit off them.
It’s not enough learning about breakout strategies because
there will be times that breakouts fail. We have to know what to do in case of
fakeouts.
This is part of your Jedi forex training. To be a Jedi
master, you must be able to master fakeouts.
Are you up for it?
"The roots of education are bitter, but the fruit is
sweet."
By Aristotle.
WHO ARE WE?
Welcome to SSL FXGURU. Our mission is to provide the highest
quality Forex services for traders.
We pride ourselves with excellence in Forex
education and as providers of Forex signals and mobile alerts. We will help you
to make your money but you must promise to do 3 things:
Trade only with our signal following our money management
and risk management techniques.
Send in your monthly statement to us to help you monitor
your account to avoid over trading and margin call.
Donate 10% of your profit with every withdrawal you make and
mail us your receipts as we will help you make at least USD300,000.00 in 10
years.
"It is the mark of an educated mind to be able to
entertain a thought without accepting it."
By Aristotle.
Support and Resistance Levels Are Tricky
One thing you should remember to note about support and
resistance levels is that they are areas in which a predictable price response
can be expected
Support Levels
Support levels are areas where buying pressure is just
enough to overcome selling pressure and halt or reverse a downtrend.
A strong support level is more likely to hold up even if
price breaks the support level and it provides traders a good buying
opportunity.
"Some of your greatest blessings come with patience."
By Warren Wiersbe.
"Do not let the negative thoughts in your head get on
you. Just breathe, smile and let it go."
By Unknown Author.
How to Detect Fakeouts (Part 2)
Wait for it… Just a few more moments… To see price inch one
direction… Then suddenly move miles in the opposite direction!
Huh?!? What the heck?! What happened to “the bread and
butter and the end of world hunger” strategy?
End of story: You are left eating ketchup packets and
crackers like Tom Hanks in The Terminal.
"Success is not final, failure is not fatal; it is the
courage to continue that counts."
By Unknown Author.
