On the 31st April 2021, there is a formation of descending triangle on the GBPUSD as shown on the picture below. The price eventually broke the triangle’s resistance level and it prompt me to enter a BUY trade.
However the price moved back to hit our stop loss and this is what we called the “fakeout”. The fakeout is the main reason why new traders always loss money in trading but this is something that we are unable to prevent.
What I am teaching you here is how you can make back the losses from fakeout and then turn your account back to profits.
Actually this trade can still be prevented as the triangle is a descending triangle which is a sign of down ward movement.
What really causes Fakeout in trading?
Most new traders will think that fakeout are traps that are created by their broker or by pro traders to mislead them to enter a wrong trade.
Actually fakeout is produced when the price try to break a major resistance or support but find it very hard to break through and therefore the traders decided to trade the other direction.
How to Profit from Fakeout?
Fakeout is one of the easiest way to trade.
Using the example above, you can see that the price broke the resistance but eventually moved back into the triangle and then break downwards.
For us traders, what we can do is to enter the breakout after a breakout as the next breakout is usually the true breakout.
We made a nice profit on that day for the second breakout as the price moved down a swooping 120 pips.
I hope that you have learned something from this post which can help you to make some profits in trading.
For those of you who are interested to join my forex course plus trade copier service, you can take a look at the link below