80% of all breakouts by traders fail… Here’s why | by EasyTrader | Coins | March 2024
You have to be a very good trader to know how to trade breakouts consistently well.
Every candle is a potential breakout trade…every candle.
But did you know that only 1 in 5 breakout trades are successful?
Most will either fail and fall back into a trading range or fail and fall back above or below support or resistance.
That’s why you need to be in the mindset every time you see a setup for a potential breakout, there’s only a 20% chance of success.
The majority of breakout traders fail.
This is why it fails…
- They chase a breakthrough, but when it collapses, they are unable to get out and end up with big losses. They do this 4 out of 5 times. Every time you lose big, sometimes you get lucky and close the trade at breakeven, but not every time.
- If you succeed the fifth time, you close the deal too early. This means that losses far exceed profits.
So the deal is: Expect breakthroughs to fail, and if they do, get out quickly.
If the breakout is successful, try to stay in the trade for as long as possible and add to your position. Breakouts don’t happen often.