After learning something about 'Bull Trap' from the previous post, you are now about to learn its opposite counter-part known as the 'Bear Trap'.
Bear Trap is actually a false break-out that only occurs in the support level. Encountering bear traps on your trade could lead into losses and messes your interpretation from your chart pattern.
In order for you to have a clearer and better understanding about bear traps, lets have some few examples:
On the image above, you will notice the two horizontal lines. The orange-horizontal line is the resistance level of the trend while the red-horizontal line is the support level. Basing it on the trend, you will notice that the candlesticks made multiple attempts to break the support and resistance levels until the they finally did it at the support level. The portion where I encircled were the group of candles that confirmed the breakout. Suddenly, the seventh candlestick goes back in the opposite direction.
Here's another example below:
Its almost the same as the first example above wherein the breakout was clearly shown on the portion that I encircled. It consisted of six candlesticks before it has decided to go back in the opposite direction.
Avoiding bear trap depends on many different circumstances. Other professional traders actually have their own secret method on how to deal with them. But as for me, my main method is to properly setup your stop-loss. Yes you will be attaining losses but you will be earning more once you have known that they were just false breaks.
For beginners, it is important for you to learn how to accept your losses. It is actually normal to lose some of your trades that even professionals do also incur losses. When I was a beginner, one of my greatest mistake was looking for the best possible method that does not lose or in short 'the holy grail'. Well, it took me a lot of years chasing for a method that does not exists.
Bear Trap is actually a false break-out that only occurs in the support level. Encountering bear traps on your trade could lead into losses and messes your interpretation from your chart pattern.
In order for you to have a clearer and better understanding about bear traps, lets have some few examples:
On the image above, you will notice the two horizontal lines. The orange-horizontal line is the resistance level of the trend while the red-horizontal line is the support level. Basing it on the trend, you will notice that the candlesticks made multiple attempts to break the support and resistance levels until the they finally did it at the support level. The portion where I encircled were the group of candles that confirmed the breakout. Suddenly, the seventh candlestick goes back in the opposite direction.
Here's another example below:
Its almost the same as the first example above wherein the breakout was clearly shown on the portion that I encircled. It consisted of six candlesticks before it has decided to go back in the opposite direction.
How to Avoid Bear Trap False Breaks?
Avoiding bear trap depends on many different circumstances. Other professional traders actually have their own secret method on how to deal with them. But as for me, my main method is to properly setup your stop-loss. Yes you will be attaining losses but you will be earning more once you have known that they were just false breaks.
For beginners, it is important for you to learn how to accept your losses. It is actually normal to lose some of your trades that even professionals do also incur losses. When I was a beginner, one of my greatest mistake was looking for the best possible method that does not lose or in short 'the holy grail'. Well, it took me a lot of years chasing for a method that does not exists.
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