Breakout Trap (Educational Purpose)

Breakout Trap in PENIND
Daily Analysis of PENIND
This is how investers traps in a breakout trap

PENIND has made double bottom patten and as per Double Bottom Pattern analysis the projected target has been reached but the picture is not over yet!!!
Some investers do re-entery in it after it breaks recent resistance level. Same thing happend in PENIND after reaching projected profit it gave breakout to it's recent resistance level and after only 5 trading sessions it fells upto 16% and here is Stop Loss comes into picture. If someone has put a strict Stop Loss in a system he /she may exit the trade as per their Risk to Reward ratio. He/She may end up with only 5%-6% loss. But what if someone has not set Stop Loss in a system he/she may have 16% of loss till the date. That's why stop loss plays very important role in Investing as well as trading. There is also small loophole, the abnormal increased in volume may indicate there may be operators comes into picture to trap the retail traders/investors. As soon as retailers enters into a trade there has sharp fall happened. It may caused by operators have exit their position. This is my view and not a theory.

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Avinash K.

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