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BREAKOUT SYSTEM
Price forms a lot of different patterns, trendlines, channels (consolidation).
As some point in time, there is a breakout from these above mentioned setups.
Since there is a lot of "false breakouts" happening on a daily basis, how do we know which one is going to fail us?
Well, we can't produce a black and white answer for this question, however, we can increase our odds of winning by applying the following rule:
Each time you see a breakout happening, wait until the candle that broke the support or resistance or trendline closes.
Next, take the high and low values of that candle, and have a buy order ready above the high of the candle, or sell order below the low of the candle.
If this is the real breakout, we will genrate money as there will be the right momentum happening.
If this was a false breakout, we will have a trade executed in the current market condition, which should also generate positive outcome.
This is a very simple rule, but really, not too many traders know about it or use it.
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