We’re sure you’ve heard the breakout strategy a lot. And sometimes, we missed out on a breakout strategy. However, we still want to get profit in the moment of breakout that is happening.
There are some tips from Cory Mitchell about day trading strategy called “Second Chance Breakout”. Then what is “Second Chance Breakout”?
When prices are in sideways motion, certain canals or price patterns, such as triangle, head and shoulder patterns and others, there are breakout levels where prices shift out of the pattern. If it is really a breakout, then the price will continue to grow in line with the breakout.
However, often the price has been breakout then turn around and re-test (re-test) the previous breakout level. Occasionally also did not touch the previous breakout level, but only relatively close to it. Well, such price movements provide a second chance for traders to do entry.
In the picture above there are two breakouts. The first breakout occurs in the “neck” section of the Head & Shoulder pattern, while the second breakout occurs after the formation of a small channel.
Enter Position In Second Opportunity
If the price breakout to the top of a price pattern, then the second opportunity provides a buy opportunity. And if the price breakout below the price pattern, then the second chance is a sell opportunity.
If you are eyeing a second chance, then be prepared to open the position once the price pullback enters the initial breakout level range. As soon as the pullback is slow and the price starts to shift in the same direction as the previous breakout, you can immediately make entry position.
When exactly is “starting to shift in the same direction as previous breakouts?” The answer can be subjective and depends on which approach or trading strategy you choose to use. For example, the candlestick engulfing pattern can be used as a signal that the pullback is over and the price movement in the same direction as the previous breakout has already begun.
As an illustration, if the initial breakout is downward, then wait until the pullback price approaches the breakout level, then once the price starts falling again, do Sell. Position the stop loss of a few pip or a few ticks above the high level of the pullback.