What is a fakeout in trading?
In one line: A fakeout is a false break. Price pokes past a support or resistance level, then quickly snaps back the other way.
A simple example
A stock has a floor — support — at about $80.00. It bounced there twice.
This morning price drops to $79.40. Some traders sell, thinking the floor has broken. Others had their stop loss just under $80 and get pushed out.
But by the close, the candle finishes at $80.30. All that's left of the drop is a long thin line below the body, called a wick. The floor held. That was a fakeout.
Why fakeouts happen
Obvious levels attract lots of orders. Stops pile up just below support and just above resistance. When price reaches them, those orders fill in a burst, and then the move runs out of fuel.
Some traders call this grab of resting orders a liquidity sweep. Our guide to liquidity sweeps explains it in plain words.
Why it matters
A fakeout can look exactly like a real breakout for a few minutes. If you act on every poke, you'll often be getting in at the worst moment, just before price turns.
This is why we use one simple rule: only a candle body closing past the level counts. A wick through it is a test, not a break. The rule won't catch every fakeout, but it removes many of them.
A common mistake
Moving the stop wider after getting faked out. It feels like the fix: "Next time I'll give it more room." But a wider stop with the same size means a bigger loss.
If you want more room, make the trade smaller so the money at risk stays the same. The position size calculator does that math.
The other trap: jumping straight back in, the opposite way, out of frustration. That's how one stopped trade turns into three. More in revenge trading.
Questions
Is a fakeout the same as a stop hunt?
People use the words loosely for the same picture: price runs past an obvious level, fills the orders resting there, and reverses.
How can I avoid fakeouts?
You can't avoid them all. Waiting for a body close, checking the bigger chart, and placing stops past the level rather than right on it all help.
Can a fakeout become a real breakout later?
Yes. A level can fake out once and break properly the next week. Judge each close on its own.
Want the next step? We'll walk you through it.
Four free lessons by email, one every few days — each with a 10-minute exercise on a real chart.
Send Me the Free Lessons 4 short emails · No spam · Unsubscribe anytimeOr see the whole method, step by step:
See What’s Inside the Course Try everything free first. Decide when you're ready. · Open the free chart tool (works in the TradingView phone app)One chart idea a day, in plain English. Follow along: