Fake breakouts are, without question, one of the most gut-wrenching experiences in trading.
Why?
Because in a matter of seconds, your position goes from dynasty greenā¦ to peasant red.
Confidence turns into confusion. Conviction turns into panic.
And suddenly, youāre not trading anymoreāyouāre reacting.
Itās a violent shift. A psychological whiplash.
And yetā¦ it happens over and over again.
So the real question isnāt why do fake breakouts occur?
The real question is:
Why do we keep getting caught by them?
Why donāt we instinctively reduce risk the moment the story changes?
Why donāt we have a planānot just to protect capitalābut to profit from being wrong?
Because the issue isnāt the setup.
Itās the mindset.
Looking back on my own journey, one truth stands out with brutal clarity:
Repeated behaviorāboth in trading and in lifeāreveals one thing:
an unwillingness to accept the other side of the bet.
We donāt lose because price reversed.
We lose because we were never mentally positioned for it to.
A range sweep isnāt just a market event.
Itās a test.
A test of ego.
A test of discipline.
A test of whether youāre trading probabilitiesā¦ or defending a bias.
Because every breakout has two outcomes:
continuationā¦ or failure.
And the traders who win long-term arenāt the ones who always get it rightā
theyāre the ones who are prepared for both.
Simple solution?
Accept the Two Outcomes Before Entry
Every breakout has two paths:
ā¢ Expansion
ā¢ Failure
There is no third option.
Before you enter, you should already know:
ā¢ Where youāre right
ā¢ Where youāre wrong
ā¢ What you do in both scenarios
If you only have a plan for continuation, youāre not tradingāyouāre hoping.
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2. Stop Trading the Breakout. Start Trading the Reaction.
Most traders enter on the break.
Professionals watch what happens after the break.
Ask:
ā¢ Was there follow-throughā¦ or immediate rejection?
ā¢ Did it hold above/belowā¦ or snap back into the range?
The breakout is the bait.
The reaction is the signal.
Best Regards,
COI LEMARD