How breakouts work in this market? Important read

 In Food & Travel, Trades, Trading Life, Trading Thoughts

 

$RWLK, this is the example of the market in these days. If you take breakouts and breakdown you will not win at the end. 
Why? MM (market makers), Big Hands” are using the usual technical analysis to trap traders. In the example above you can see how the 3 fake breakouts trapped longs. 

In the 90’s when I started to trade, breakouts and breakdowns were the main entry pattern signal. So we needed only the confirmation of volume.

Nowadays instead this is not anymore effective. We need to trade dips for long and pops/spikes for short. It may seem a different way of thinking but it’s the real effective way of trading and then earning.

Do not follow the traders that will tell you to trade the breakouts as many of the chat pumps nowadays they use this system to get out of their position or trading oppositve. 

So before taking a long, look:

  1. is at a dip or breakout?
  2. what is the tape doing?
  3. do we have history of false breakouts on this stock?

All this will help you determine the right entry.

See you in Smallcaproom

 

Jtrader

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