You know that moment when a chart teases you—price breaks the line, your heart races, then bam—it reverses and leaves you hanging? That’s a fakeout, a classic trap even pros fall into. But don't stress. Let’s break it down like a chill chat—with simple rules and real-talk examples.
🧠 What’s a Fakeout?
A fakeout is when price breaks through a trendline or support/resistance level, tricks you into thinking a big move’s coming… then snaps right back.
Imagine you just got home. You see the door slightly open and your heart races; you try to rush in to know what happening, you push the door and, SLAM, it entirely swings off the latch, ruining the door entirely. That’s exactly what fakeouts do to your trades.
However, what if you had actually waited a sec and gently opened the door fully and quietly. Now you're inside, the whole place is still intact and your expensive appliances are still comfy sitting where you left them. That’s trading the retest. No bumps, no traps.
Why Does Fakeouts Happen (And Why It Hurts)?
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Stop-hunting: Big players push price to hit small traders’ stop-loss orders.
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Low-volume trickery: Breakouts on thin volume often bounce back on their own.
🛡️ Here is a Run-down on How to Dodge Fakeouts:
1. Wait for a Candle Close
Don’t rush. Let the candle close past the trendline on your chosen timeframe. If it closes back inside, that’s a fakeout. Treat it like a red flag.
2. Watch the Volume + Momentum
Strong breakouts come with big volume and fast price action. But if it's slow and quiet, odds are it's fake.
3. Use Space as a Buffer
If price is drifting toward a trendline from far away, like a snail🐌, the breakout is likelier false.
4. Trade the Retest
Once price breaks out and then retests the level (trendline or support/resistance), that’s often where the real move starts.
5. Spot Chart Patterns
Head-and-shoulders or double tops/bottoms love to fake you out. Instead of chasing, wait for a retest or evidence of a real move.
6. Use Risk Control
If you still jump in early, keep your stop-loss tight and size your position small, so that even if it bounces, your wallet survives.
Quick Cheat Sheet
| Trying To Trade | Do This Instead |
|---|---|
| ‣ Breakout | Wait for candle close + volume surge + retest |
| ‣ Snap-back after fakeout | Be ready to fade: small position, tight stop |
| ‣ Thin volume move | Sit it out |
Conclusion
Fakeouts are sneaky. They flick you in, hit your stops, and leave you stuck. But if you:
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Wait for clean closes,
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Watch volume & speed,
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Trade retests,
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Manage risk smartly,
...you can dodge most traps and surf the real wave instead.
That’s the tea ☕—simple, sharp, and deceptively effective. Keep it short, keep it smart, and let the trend confirm, not tempt.
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