Why breakout never works

2021年10月30日

Hello traders!

This is another educational post just to break your false perspective which will benefit you and it will also help you not to fall into the trap of uneducated traders.

I have seen traders who just make a trendline line and put a bullish arrow and say that after the breakout price will go to heaven but in reality breakouts never works and they are very far from reality.

If you buy a breakout blindly then there is only 1 out of 6 chance that you are correct. In other words, you will keep losing again and again with that strategy.

So why breakout never works?

The patterns that we see are illusions, they are not real but the market does react to the trendlines and patterns.

What I mean by the reaction is that after a breakout market forms different kinds of reactive patterns. These patterns help the market to move further up or they push the market back in the trendline and most of the time these pattern pushes the market back in the trend.

If you can figure out what pattern is formed after the breakout then you can predict easily that the breakout will work or it will fail.

Do your research and ask the questions.

Here is the tip: Selling on bullish breakouts is more effective than buying on bullish breakouts.