Why Most Traders Fail at Breakouts
30sThis segment challenges a common trading misconception, offering a counterintuitive insight that sparks curiosity and debate.
▶ Play ClipAI Summary
The video explains a common trading mistake: mistaking a simple break of a recent high for a valid change of character. It emphasizes the importance of analyzing the last two breaks of structure and identifying unmitigated liquidity zones to avoid false breakouts. The creator suggests a contrarian approach: instead of going long on a breakout, look for a short when price reaches an unmitigated zone.
[00:02]
Invalid Breakout
A single break of a recent high is not a valid change of character. You must look at the last two breaks of structure.
[00:27]
Unmitigated Liquidity
The first break is still unmitigated, meaning price hasn't returned to that level. The latest high is likely liquidity to pull price into the zone.
[00:42]
Contrarian Trade
Instead of going long, look for a short when price reaches the unmitigated liquidity zone, then it goes in the real direction downward.
Mentioned in this Video
Tutorial Checklist
Study Flashcards (3)
What determines a valid change of character?
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What determines a valid change of character?
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The last two breaks of structure.
00:15
What does a recent high mean if the first break is unmitigated?
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What does a recent high mean if the first break is unmitigated?
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It's likely liquidity designed to pull price into the unmitigated zone.
00:27
What trade should you consider when price hits an unmitigated liquidity zone?
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What trade should you consider when price hits an unmitigated liquidity zone?
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Look for a short, targeting the unmitigated liquidity zone.
00:42
💡 Key Takeaways
🔧
Two-Break Rule
Provides a clear, actionable criterion for distinguishing valid breakouts from false ones.
00:15
💡
Liquidity Trap
Explains how recent highs can be engineered to lure traders into bad entries.
00:27
⚖️
Trade the Unmitigated Zone
Shows a contrarian approach that aligns with institutional order flow.
00:42Full Transcript
[00:02] This is not a valid change of character. If you do think this is a change of character and you're saying, "Oh, price just broke this recent high. I should enter a long." You are vastly mistaken. A valid change of character depends on
[00:15] the last two breaks of structure. We have one break here and another break here. Yes, price broke this high, but you have to look at the last two first. So, let's focus on the first one. This area is still completely unmitigated,
[00:27] meaning price has not returned here yet, which means this latest high is probably just liquidity. Liquidity designed to pull price into the zone. So, instead of looking for a long here, I'm looking for a short. Price comes to this unmitigated
[00:42] liquidity, then goes in the real direction, downward. If you want a place where I post free value just like this video, join my free Telegram. It's just a place where I post free value to help out my viewers. You can find it by going
[00:55] to my profile, click this, and then click this button right here.
