when i invest in the stocks which are on the verge of breakout, then after investing that breakout appears to be false and the stock keeps on falling.
my question is:
this is just my opinion
keep options as insurance, say u r expecting a break out on the long side, buy put options below the range to insure urself once u confirm the break out is on the long side u can sell ur put options,u will have to workout the quantities you will take depending on the positions u r holding, say the breakout if false then ur long position starts losing money then options will start yielding money. then u can ditch those long positions or hold depending on wt u r expecting out of it depending on ur strategy and term u wish to hold, then book profits n options so u wont have a net loss, instead u may end up with a net profit of break even. remember options itself is a vast entity research before getting urself into it. this may help plz refer to zerodha varsity (http://zerodha.com/varsity/module/option-theory/) (http://zerodha.com/varsity/module/option-strategies/)
The following options are available.
The breakout point itself should be your stop loss, genuine breakouts do not retrace back this point immediately. If your entry condition was the breakout , your exit strategy should be the same criteria that invalidates this breakout.
Large institutions never enter at breakouts, they wait for the breakout to complete, make a retracement and then they enter at the 2nd wave.
good answers, thanks and happy trading to you.