(Last Updated On: December 11, 2019)

So the thing about fake breakout, it’s usually cause is by manipulators, alright? So one of the easiest way to actually avoid getting into fake breakouts, alright, is to make sure that you are looking at stocks with high average trader value, okay? And reason being, because if the stock has high liquidity, it is very hard for a manipulator to be able to try to manipulate a highly liquid stock, to cause a fake breakout and then cause those traders to hide their stock loss with a fake breakout, okay?

Manipulators can only do that on very, generally, low liquidity stocks. So one way to avoid fake breakout is don’t trade low liquidity stocks, and your chances of getting into a fake breakout is going to be much lower, alright?
So that is generally my suggestion in terms of how can you try to avoid fake breakouts, without knowing whether this breakout is going to be fake or not.

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Philip Teo

Founder & CEO at Traderwave Pte Ltd
Philip Teo is an entrepreneur, speaker and trading coach who specialises in the field of Technical Analysis of the financial markets. He is currently the Founder and CEO of Traderwave Pte Ltd, a financial technology company that offers a web charting application to global traders. He has conducted many trading seminars and appeared on national television before. He is also currently an official speaker and trainer with SGX Academy. Learn more about him at his Google+ Profile, LinkedIn Profile and Facebook Profile