Introduction
The Move Designed to Deceive
Every trader has been caught by it.
The breakout that wasn’t real,
the move that looked strong
but reversed instantly.
That’s the Fakeout.
📍 A Fakeout is Smart Money’s way of clearing liquidity
before delivering the real move.
What Is a Fakeout?
The Definition:
📊 A Fakeout happens when price briefly breaks
a key level (high or low)
only to reverse sharply in the opposite direction.
It is engineered to:
- Trigger breakout traders
- Hit stop losses
- Collect liquidity
- Fill institutional orders
💬 In simple terms:
A Fakeout = a false breakout designed to trap retail.
📍 The breakout is not the move, the reversal is.
Why Fakeouts Matter
Fakeouts help traders understand:
- Where liquidity sits
- When Smart Money is manipulating price
- When NOT to enter
- When a sweep is likely forming
- Where the real move will begin
💡 If you can identify fakeouts, you stop being liquidity,
and start trading with it.
HowTraders Handle Fakeouts
1️⃣ Never enter on the breakout
2️⃣ Wait for the sweep and the reversal
3️⃣ Confirm with displacement
4️⃣ Trade the move after the fakeout
5️⃣ Journal fakeout patterns by session
📍 Fakeouts aren’t noise, they’re signals.
Example
High Sweep → Fakeout → Drop
Price forms equal highs.
Breakout traders wait.
London open pushes above the highs.
It looks bullish, wicks extend.
Seconds later:
a sharp bearish displacement candle
reverses everything.
A clean FVG forms,
a sell entry appears,
and price delivers downward.
💬 The breakout looked real, but the reversal told the truth.
The Do Nots
Common Mistakes Traders Make
❌ Buying the breakout
❌ Selling the breakdown
❌ Ignoring the liquidity sitting behind the level
❌ Trading before displacement
❌ Not journaling fakeout patterns
💬 Fakeouts punish impatience,
reward discipline.
Final Thoughts
A Fakeout isn’t a failed breakout,
it’s a planned manipulation.
Smart Money uses it to gather orders,
trap retail,
and create the cleanest entries
for the real move.
Learn to read fakeouts,
and you’ll trade on the right side
of the market narrative.