[…] A price action trader rarely enters on a breakout to a new swing high or low because they’re always looking for the earliest possible entry to minimize risk. This usually means entering on some minor pullback before or after the breakout.
For example, if you just bought a flag breakout before a new swing high, sell part of the long to the breakout traders who are getting long at the new high. Don’t buy at a price where people are taking profits on their longs because then the risk of failure is too great; too large a stop would be needed, and you would have to trade fewer contracts, limiting flexibility. […]
[…] Two of the most reliable entries are failed breakouts and breakout pullbacks because both involve trapped traders who will be forced to liquidate and move the market in my direction. […]
[…] Second attempts are especially reliable because the market is always trying to do something twice. If the second attempt fails, the market will usually try to do the opposite. That is why so many pullbacks have two legs. The market is making a second attempt to reverse and when that second attempt fails, the countertrend traders liquidate and the trend resumes. […]
[…] The second-attempt tendency also explains why a trend reversal through a trendline is usually followed by a test of the old extreme. If the test fails to resume the trend, the trend will try to go the other way, and it usually will make two attempts in the new direction, forming a two-legged correction or even a new trend.[…]