Have you ever had a stone in your shoe?
It can be annoying and painful.
So, when you do find a stone in your show, what do you do?
The answer is obvious. As soon as it happens you stop walking. You take your shoe off, remove the stone, put your shoe back on and continue walking.
There’s no point continuing to walk with the stone in your shoe, is there?
It doesn’t take long to fix it, so why put up with it?
One of the most annoying aspects of breakout trading is false breakouts. They can be annoying and painful, like a stone in your shoe.
But for some reason, many traders decide to keep putting up with them.
“It’s a part of trading” they say, you can’t stop it from happening.
Want MORE? Sign up for the free BTA newsletter and join 1000’s of other traders who receive meaningful trading content every week, straight into your email inbox. Click here to join us.
This is partially true, just like you can’t stop a stone getting in your shoe, it just happens sometimes.
But when it does happen, it’s a simple solution to resolve the issue, just like there are some simple (and super-effective) solutions to reducing false breakouts.
One of our favourite techniques, which works great on index markets is to look to other indices to see what they’re doing.
A lot of the index markets move in a similar direction, so they can give subtle clues as to whether a breakout could keep moving in your direction or might just reverse to take out your stop. (but you have to know what to look for).
Another super-effective technique is using ‘Volatility Bins’, so you only take trades when volatility is favorable for a breakout trade. And it keeps you out of trades when volatility is not in your favour, which can often be the times when false breakouts occur.
With just these 2 techniques alone, you can reduce the number of false breakouts substantially. Which often reduces drawdowns, and improves overall strategy performance.
If you’d like more tips to reducing false breakouts, check out the free 4-step guide ‘How to fix false breakouts fast’. You can download a copy at SmashingFalseBreakouts.com.
PS. In the Smashing False Breakouts course we share 12 effective techniques to reducing false breakouts. Every single technique is quantifiable and backed by research and live trading. We share the code and performance results on an example strategy so you can see it in action, and apply it to your own strategies immediately. More info is here.
Stop False Breakouts from Destroying Your Trading Account
✓ How false breakouts are the biggest leak of money for breakout traders, including Futures, Stocks, FX and ETFs
✓ How much money false breakouts could actually be costing you – without you even realizing it
✓ A comprehensive deconstruction of timing – enter breakout trades at the right time and stop costly breakout trading mistakes
✓ 4 proven approaches to slashing false breakouts today – stop them from stealing your money and eating all your profits!