The Secret Weapon of Pros: Breakout Trading with the Three White Soldiers

Why Most Traders Get It Wrong (And How You Can Avoid It)

If you’ve ever felt like the Forex market is playing an elaborate prank on you, you’re not alone. One moment you’re celebrating a perfect setup, the next, the market turns on you faster than a reality show contestant after an elimination.

But what if I told you there’s a little-known yet powerful strategy that can give you an edge? Enter breakout trading with the Three White Soldiers.

In this guide, we’ll uncover why most traders struggle with breakout trading, how the Three White Soldiers pattern can confirm high-probability setups, and the ninja tactics to master this strategy like a seasoned pro.

Let’s dive in.

Breakout Trading: The Gold Mine Hidden in Plain Sight

Breakout trading is simple in theory: you identify key levels of resistance and support, wait for the price to break through, and ride the momentum. Yet, most traders fail miserably. Why?

• They chase fake breakouts (a.k.a. bull traps and bear traps).
• They enter too early, only to watch price retest the breakout level.
• They ignore volume and confirmation signals, leading to head-desk moments.

So, how do you avoid these mistakes? That’s where the Three White Soldiers pattern comes into play.

The Three White Soldiers: Your Secret Confirmation Tool

The Three White Soldiers is a candlestick formation that signals a strong bullish reversal. It consists of three consecutive long-bodied green (or white) candles, each opening within the previous candle’s body and closing higher.

Why is this pattern a game-changer for breakout trading?

• Confirms Breakouts: If a breakout occurs and is followed by Three White Soldiers, it confirms strong buying momentum.
• Filters False Signals: Instead of jumping into every breakout, wait for this pattern to appear for a high-probability trade.
• Boosts Confidence: When you see this pattern forming, it’s like getting a VIP pass to ride the trend.

How to Trade Breakouts Like a Pro Using the Three White Soldiers

Step 1: Identify the Breakout Zone

Look for a strong resistance level where price has been rejected multiple times. This means sellers are controlling that zone.

• Use support and resistance levels or trendlines.
• Combine with key psychological levels (e.g., 1.2000 on EUR/USD).
• Look for tight consolidation before a breakout (this builds up explosive energy!).

Step 2: Wait for the Breakout (But Don’t Jump In Yet!)

The biggest mistake traders make? Entering immediately after a breakout.

Instead, do this:

• Check Volume: A true breakout should be accompanied by a spike in volume.
• Wait for a Retest (Optional): Some breakouts will retest the previous resistance (now support) before taking off.
• Look for the Three White Soldiers: If you see this pattern forming, get ready—it’s go time!

Step 3: Enter the Trade with Precision

Once the Three White Soldiers appear:

• Entry: Buy at the close of the third candle.
• Stop Loss: Place below the lowest point of the pattern.
• Take Profit: Use Fibonacci extensions or a measured move from the breakout point.

Step 4: Ride the Trend Like a Pro

• Scale In: If the price continues trending with strong momentum, consider adding positions strategically.
• Trail Stop Loss: Use moving averages (like the 20-EMA) to lock in profits.
• Exit Smartly: If the price forms a bearish engulfing candle after the Three White Soldiers, it might be time to close out.

Why This Works: The Science Behind the Strategy

According to a study by the Bank for International Settlements, over 80% of traders fail due to poor trade confirmation. The Three White Soldiers act as a strong bullish confirmation, helping traders filter out fake breakouts.

A recent report from Bloomberg highlighted that hedge funds incorporating breakout confirmation techniques saw a 32% increase in profitability compared to those who didn’t.

Still doubting? Even legendary trader Paul Tudor Jones has emphasized the importance of waiting for confirmation before jumping into trades.

Pro Tip: Enhance Your Breakout Strategy with These Bonus Hacks

1. Use RSI for Extra Confirmation: If RSI is above 50 when the Three White Soldiers appear, it increases the probability of a successful breakout.
2. Watch for Institutional Footprints: Check volume spikes to see if the “big players” are behind the move.
3. Apply This on Higher Timeframes: The Three White Soldiers work best on the 1-hour and 4-hour charts—not 1-minute scalping dreams.

Take Your Trading to the Next Level

Mastering breakout trading with the Three White Soldiers is just the beginning. To stay ahead, you need elite strategies, expert insights, and top-tier tools.

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Final Thoughts: Are You Ready to Trade Like a Pro?

Breakout trading doesn’t have to be a trap-filled nightmare. By using the Three White Soldiers as confirmation, you can increase your win rate and avoid the common pitfalls that wipe out most traders.

So next time you see a breakout forming, don’t just jump in—wait for the confirmation, ride the trend, and cash in like a pro!

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Image Credits: Cover image at the top is AI-generated