A stock market trading tip

for exit trade

in case of a failing breakout or breakdown

for any swing trading system

This stock trading tip can be used if you’re entering a breakout trade. The breakout could hold, but sometimes breakouts will fail. Such a failure is demonstrated by a single reversal of a candlestick . The price during a trading day is trying to move above the resistance level, but it fails. The closing price is again below this resistance level.

A single candlestick with this shape is known as a shooting star (for breakout failure) or a hammer (for breakdown failure).

Look at this example of a failed breakout of BVF stock:

Do not wait, and if you see a negative candlestick, which provides information about a failed break of resistance or support, exit trade immediately.

Do not wait for your stop-loss exit. Based on my stock trading knowledge, 95% of such reversals will reach your stop.

So, it’s much better to leave a trade with a smaller loss than to wait for your stop-loss to be triggered.

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