A trader explains why waiting for retracements after breakouts beats entering immediately. Trading the breakout itself often means larger stop losses when price revisits that level, potentially doubling or tripling your risk.
When you enter a trade the next thing you're looking for after being triggered is a retracement. I particularly don't really like breakout trading meaning if you have a certain level and that level has been breached you will find people that will then enter a short here in order to continue it. I don't particularly favor that because whether you are trading trend lines, say you have a trend, that trend has been broken you will typically see a revisiting before that happens. Retracements are very optimal because if you are wrong and let's say you're playing a break and retest if this breaks and it retests and you enter here and your stop limit says above this high say you enter here the distance between this and this is not very far. If I entered here and now I'm going to suffer this entire retracement back including my stop limit. That could be double or triple the distance that you're looking for which translates into hundreds or thousands of dollars.
