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How to protect yourself against false breakouts


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How to protect yourself against false breakouts

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 xevanchan 
New York City, NY
 
Experience: Intermediate
Platform: Ninjatrader 8
Broker: Dorman Trading
Trading: emini ES/NQ
 
xevanchan's Avatar
 
Posts: 160 since Sep 2018
Thanks: 173 given, 294 received

I'm pretty disappointed in my trading so far today; my mind isn't making reflexive decisions and I'm unsure why things are happening. I had a few questions after this trade.

I was stopped out for 6 ticks on a breakout trade. Prior to the trade, the price had bounced off the support point 2732 at least 4 times, and had failed to break out of resistance twice at 2735.50. I did notice significant long volume, especially about 800 orders on the DOM at 2310 after I had already placed the trade. After chopping between the two points for an hour, it broke out, downwards, and filled the stop buy I had places 2 ticks under support. (2 ticks because I always get filled and faked out with one)

This has happened to me several times; at 10:44, I am close to hitting my 2 point target, maybe 6-7 ticks. I don't get filled, and the market hits a complete 180 and the next candle is the same size as the previous one, in the opposite direction. I lose my only opportunity to cover, and am stopped. The only way I see this being preventable is a trailing stop loss. How did the short momentum dissipate that rapidly? The same scenario happened to me yesterday.

My understanding is that overnight the market had strong upward momentum, and what I thought was a downtrend was probably consolidation before continuation. I suppose the "breakout" was just the final leg of the retrace?

Following this fakeout, the market proceeded to shoot up nearly 10 points, but wasn't really presenting solid entry points, with no retraces of more than one candle. These moves are often the most significant; I can never seem to catch them, and if I join halfway through, you know how FOMO goes. This move happened directly after a downtrend (or consolidation in the longer chart), and I would have never predicted it. How can I join in on these huge moves? Using measured moves maybe?

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