April 6, 2011
Fake-out breakouts, don’t let this happen to you.
Head Fakes / Fake-out Breakouts and how to avoid getting hurt by them
o Use a slower timeframe to find the highs and the lows that you want to trade with.
o Mark the highs and the lows, and then we wait patiently for price to come to us.
o Once we get to that area, use a faster timeframe to look for a price pattern
o So how do we know that the lows are going to hold?
o How do we know that this rise off the lows won’t just be a fake-out? And then make new lower lows?
o MOMENTUM is my clue
o Overbought momentum = not buying
o Oversold momentum = not selling
How do we use the term ‘ticks’?
o Tick = smallest increment of price
o PIP = smallest increment in Forex (completely made-up)
o Seconds = smallest increment of time
o How do we calculate profit?
Why do we buy when the MACD is red?
– I want to buy when price is oversold
