Part I. Intro to Breakouts and Fakeouts Trading. Commander in Pips: Although we’ve spoken about breakouts and fakeouts previously, we did that in application to some strategy or tool of technical analysis. It this current chapter I offer you a bit more about the trading of breakouts or fakeouts themselves and some indicators that you can use to more clearly identify a breakout and/or fakeout. Pipruit: That’s great. After those topics that we’ve discussed and told about breakouts, I wanted to ask you about this. Is there any way to clearly identify a breakout? Since sometimes this is a most important moment in the trade. Commander in Pips: You’re right. As we already know, a breakout is strong move of price outside of some levels that held the market for some time and moving beyond these levels is called a breakout. These levels could be different – horizontal support/resistance, i.e. some range, Fib levels, pivots, trend lines etc. Generally speaking our task is to enter right at the moment of breakout and then riding on it, harvesting all of the breakouts’ profit until volatility will decrease. Pipruit: Volatility? What is it, and why volatility? Commander in Pips: Well, on other markets most traders use trading volume or tick volume for that purposes. The major rule tells that if a breakout accompanied by great trading volume then it more probably will be true, and vice versa, if breakout is not supported by growing volume, it is more likely to be false. Since one of the unwelcome properties of the spot Forex market is the inability to see true trading volume, we have to use different indicators. But these probably are even more useful. These indicators measure volatility instead of trading volume. This is extremely important in option strategies, but also could be used for breakouts classification. Pipruit: And why we can’t use volumes?