The Secret to Identifying Real and Fake Breakouts: Basic Knowledge for New Traders

In financial trading, determining whether a breakout ( is real or fake often confuses many people. In reality, there is no need to stubbornly seek an absolutely accurate prediction. By simply combining the volume factor, traders can grasp important clues.

1. Volume – A Decisive Factor for the Reliability of Breakout When the price breaks through support or resistance, if accompanied by high trading volume, it is highly likely that this is a genuine breakout. This is similar to a fruit market: when a large number of buyers and sellers participate, the market demonstrates a clear consensus on the trend. Conversely, if a breakout occurs but the volume is weak, the risk of a "price trap" is very high.
2. Don't Get Caught Up in a Small Fluctuation Zone In the accumulation or sideways phase, short-term profits are usually small and carry high risks. Traders should focus on the major trend after the breakdown, where there is strong participation from large capital flows. Institutions or "whales" often do not stop at pushing prices up/down by a few percent; to recover their capital and make profits, they are forced to create a long and clear trend.
3. Left and Right Trading Left-side trading ): usually involves bottom fishing or selling peaks, only suitable for the ( spot market. In the derivatives market, "pin pull" fluctuations can occur unexpectedly and easily lead to account liquidation. Right-side trading ): means only participating after a real breakout occurs. This method saves observation time, increases safety, and stability.
4. Trend Following Rules In an uptrend, one should only prioritize buy orders (long); in a downtrend, one should only prioritize sell orders (short). Trying to catch V-shaped reversals is often difficult to grasp and can easily lead to losses. It is best to take profit when the price breaks down the accumulation zone and to overlook small profits at the peak.
5. Larger Time Frame – Higher Reliability In larger cycles such as the daily frame (D1) or the 12-hour frame (H12), the breakdown signals are more reliable compared to smaller frames. In trading strategies, most breakouts in larger timeframes can be considered genuine signals to follow the trend. 👉 Conclusion Identifying whether a breakdown is real or fake does not necessarily have to be overly complicated. The key lies in observing the trading volume, choosing the right trades, and adhering to the principle of following the trend. If one can patiently ignore small fluctuations to focus on the larger trend, the trader will significantly enhance their chances of success.