Just realized most traders are getting trapped by the same thing over and over. They don't even know what a fake-out is, and that's why they keep getting stopped out. Let me break this down because it's actually pretty important.



So there are two main things happening in the market that look similar but play out totally different. First, you've got the break of structure. This usually follows the main trend you're trading. Price will punch through a key level with real momentum and keep pushing in that direction. The structure stays bullish or bearish as long as price holds above that breakout point. When this happens, you want to ride it.

Then there's the liquidity sweep or fake-out. This is where it gets tricky. It usually goes against the overall trend of your timeframe. Price will break out of a zone or key level, but then it quickly reverses and trades back inside. Sometimes it's just a wick, sometimes a few candles close above the zone before dropping back in. This is what catches people off guard.

Here's the thing though - both are tradeable if you know what you're looking at. Use the first one to keep riding the trend and stack your wins. With the fake-outs, you can either take counter trend trades or just expect the market to give you a correction while that fake-out area holds as support or resistance.

If you're just starting out, stick to 4hr charts and higher. Lower timeframes will mess with your head because the noise is insane. Once you can spot a real break of structure versus a sweep on the daily or 4hr, you'll stop getting shaken out and actually start catching the moves that matter.
This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
  • Reward
  • Comment
  • Repost
  • Share
Comment
Add a comment
Add a comment
No comments
  • Pin