What a fakeout is
A fakeout, or false break, is when price appears to break through a support or resistance level, drawing in traders who expect a continuation, only to reverse sharply back the other way. Those who entered on the break are left holding losing positions as price snaps against them.
Fakeouts are one of the most common ways breakout traders lose money, and one of the most frustrating experiences for beginners. The move looks exactly like the real thing until the moment it does not.
Why they happen at obvious levels
Fakeouts cluster around the most obvious, widely watched levels — precisely because so many people place orders there. Stop-loss orders tend to sit just beyond round numbers and clear highs and lows. A push through those levels triggers a burst of orders, creating a spike that quickly runs out of fuel.
Once those clustered orders are consumed, there may be little genuine demand or supply to sustain the move, so price falls back. In effect, the traders who chased the break provided the liquidity for others to trade against them. Understanding this makes the pattern less mysterious and less tempting.
Avoiding being the fuel
You cannot reliably tell a fakeout from a real break in advance, so the defence is procedural, not predictive. Waiting for price to hold beyond a level before committing filters out many fakeouts, at the cost of a later entry. Placing stops with a little room beyond the obvious spot avoids being picked off by the initial spike.
Most importantly, always trade with a defined stop and a size you can afford to lose. Fakeouts hurt most when a trader chases with too much size and no stop, hoping the break was real. Accept that some fakeouts will catch you regardless, and make sure none of them can seriously damage your account.