Trade what's happening...not what you think is gonna happen

1 thg 8, 2021

As soon as we see a breakout on the chart we form a basis ( or have a belief ) that the stock will burst and go upside.
We should not try to predict the market. Instead, we should wait and let the market tell whether the breakout is false or true.
You can crosscheck with other indicators. I personally use PRICE ACTION data i.e. after breakout the upper trend line previously acting as resistance now should act as Support.
Risk management - Enter 30% position at breakout, if the trade fails then your loss will be only upon 30% position. If the price respects the upper trend line then you can execute your remaining 70% position.

There is a big difference between predictive technical analysis and reactive technical analysis.
Predicting is trying to forecast where prices will go in the future and taking trades based on that belief.
Reactive trading is based on taking a trade after a signal has indicated the beginning of a trend.
The biggest leap to profitability comes when we stop taking trades based on what we think should happen in the market, and instead learn to trade signals that react to what is happening.

Note- The market doesn’t care about your opinion. It will go where it wants to go based on all of the participants’ actions. Get in the habit of going with the flow, and avoid trying to predict where the flow is going.