Question on false breakout prediction

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:

  1. how to know it is going to be the false breakout?
  2. and how to recover the losses from it?
    any other suggestions and how do you face such kind of situations?
    any remedy for this

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 ( (


The following options are available.

  1. 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.

  2. 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.