How to Stop Chasing Breakouts as a Beginner: 3 Entries That Wait

Short answer: You stop chasing breakouts by refusing to buy the breakout candle and planning one of three entries that wait for proof instead: the retest of the broken level, the first pullback after the initial push, or an opening range breakout that has confirmed on volume. Each one puts your stop just under a level price has already proven. If none of them shows up, you let the stock go.

TL;DR

• Chasing means buying after price has already run away from the level, so the nearest logical stop is far below you and the room above is small.
• The retest: the level breaks, price comes back to it and holds, then you buy.
• The first pullback: after the first push, wait for a higher low and a candle that breaks the prior candle's high.
• The opening range breakout: let the first candles print, then take the break only if volume confirms it, on a stock that is in play, meaning it shows higher than normal trading activity that day, usually because of news.
• No breakout success rate is worth quoting. I have not found a study that measures one for intraday small caps. What you control is where your stop sits, and every entry here comes with one.

What counts as chasing a breakout?

A chase is any breakout entry where the move made the decision and your plan never got a vote. The stock clears the pre-market high, rips three green candles, and you buy because it is still going. By then the level you could have risked against is far below your fill.

Here's how I put it in The Momentum Method: "The traders who lose the most are the ones who jump into the very first green candle out of the open. I let price prove that buyers are defending a level first, a green candle flipping off support, a reclaim of the 90 EMA, volume stepping in."

And the short version: "Chasing weak breakouts is the fastest way to hand your money to someone else."

A quick test from the FOMO guide: if you are asking yourself "should I get in?", you may be chasing, because a planned entry has already answered that question. That guide covers why the urge is so strong. This one is about what to do with your entries instead.

Why does chasing a breakout cost so much?

It wrecks the stop. A breakout trade is wrong when price falls back under the level it broke. The further you buy above that level, the more you have to lose before you find out.

Here's a made-up example to show the math. The numbers are invented and round, and no real trade sits behind them.

A stock bases under its pre-market high of $5.00, breaks it, and runs to $5.40 in three green candles. The next resistance is a prior high at $5.60. Same stock, three ways in. In the last column, R is your risk from entry to stop, so 2R means room worth twice that risk:

Room is only the space price would have to cross, and price may never get there.

In my pullback guide I measure that room before every entry: "I want at least 2R of open space. If it isn't there, I cut size hard or skip." The chase fails that test before it starts. The two waiting entries pass it.

Size makes it worse. On a $50 maximum loss per trade, 45 cents of risk lets you hold 111 shares. Nine cents lets you hold 555. And if price does come back to $5.06, where the retest buyer gets in, the chaser is 34 cents under water.

There's research on the habit itself. In a 2008 study called "All That Glitters", Brad Barber and Terrance Odean found that individual investors are net buyers of attention-grabbing stocks: stocks in the news, stocks with unusually high volume, and stocks with extreme one-day moves. A later paper by Barber and three colleagues found that intense buying by Robinhood users forecast negative returns, with average 20-day abnormal returns of -4.7% for the top stocks those users bought each day. That is an average for one group of retail investors, and it says nothing about any single breakout. It does say that buying whatever is already screaming at you is a habit the data doesn't flatter.

How do you stop chasing breakouts? The three entries that wait

Every one of these setups asks for the same thing: a level, a hold or trigger at that level, and a stop just beneath it, with more room at the open, when spreads are widest. Pick the one that fits the chart in front of you.

Entry 1: The retest (break, pull back, hold)

The retest puts you back at the level you missed.

My rule for the pre-market high breakout is in The Momentum Method, and it reads: "Price breaks the pre-market high, pulls back, and confirms support off the 90 EMA before continuing. I want the pullback and the hold, not the first stab through the level."

The same idea applies to any level that broke. In my 2026 strategy post, re-entries happen "only on a confirmed supply flip: break above the rejection high, pull back, retest, then take it again."

Three past trades from my recaps show it, with the levels exactly as I wrote them. I picked them because they show the entry. They are not results to expect, and plenty of retests fail, which is why each one came with a stop.

• TRNR. "Then it broke the pre-market high, pulled back, held the 90 EMA, and I took the breakout at 64 and a half cents risking a cent and a half, and it ran to 71." (The Momentum Method)
• LGHL. After my first exit, the rejection high became supply. "The rule from there: price has to break back above, pull back, and retest to confirm before I touch it again." It did, and "I took the next leg from $4.06 all the way to $4.73."
• KIDZ. My plan before the bell was to "do nothing until price breaks above those premarket highs, then trade pullbacks." Once it broke over $1.30, I bought the pullbacks: "Pullback to $1.30, move back to $1.40." (full recap)

What to watch: the pullback into the level should be orderly, with lighter volume. If it drops back below the level with conviction, the breakout failed, and the retest buyer simply never got a trigger. The breakout trading guide lays out this break, hold and retest model step by step.

Entry 2: The first pullback after the push

Sometimes a stock breaks out and never comes back to the level. That is where the first pullback earns its place. You let the first leg go, then buy the first controlled dip on the way up.

My version is in The Momentum Method, and it reads: "The runner surges, pulls back to the 90 EMA, and holds. I enter right off the average with a stop just below it". And I only take it on the front side of the move: "when price is above the averages and the 9 is stacked above the 20."

The pullback guide gives the trigger and one warning. The trigger: "After a pullback, price sets a higher low and then breaks above the prior candle's high with a strong close." The warning: "First pullback can be great, but only if you're not chasing late."

That guide also lists what does not count as a trigger. These are false triggers that trap traders who enter early:

• a wick through a level with no follow-through
• a single green candle that immediately gets rejected
• a breakout attempt on no volume that stalls instantly

Two of my recapped trades:

• GNPX. After a long, tight consolidation under resistance: "When the breakout candle came, I didn't chase it. Instead, I waited for the first pullback into the 9EMA, confirmed the retest, and then entered." I scaled out into the push toward $0.90 and did not hold for $1, because sellers were sitting between $0.85 and $0.90. (GNPX recap)
• TRNR. "I took the first pullback off the 90 EMA at 59 cents, risking two cents to 57, and scaled out near resistance." (The Momentum Method)

If the dip is fast, heavy with selling, or breaks the trend, treat it as the move ending and let it go.

Entry 3: The opening range breakout, confirmed

The open is where breakout chasing is hardest to resist, because everything moves at once. The opening range is the high and low of the first few minutes after the bell.

My own version at the open keys off the pre-market high, not the opening range high. From The Momentum Method: "I don't buy the first candle of the open. I wait. The second candle needs to break the pre-market high on higher volume with a strong close, and the third needs to show aggressive buying stepping in above a key level. When the volume confirms, I take it. When it doesn't, I pass."

The ORB guide adds rules you can adapt to your own trading. Wait for at least one full 5-minute candle to print before you consider anything. Trade smaller at the open. And if price breaks the range and rips without giving you a clean entry, either wait for a pullback to the broken level or move on.

In my patterns hub this one ranks last of the seven, because the break happens fast and spreads are wide at the open. If you're new, the first pullback is the closest match to the moving average pullback that ranks second there, and the retest matches the pre-market high breakout and retest at third. The hub's own advice is to start with the VWAP reclaim or the moving average pullback.

There is one piece of research worth knowing here. Carlo Zarattini, Andrea Barbon and Andrew Aziz backtested the 5-minute opening range breakout on more than 7,000 US stocks from 2016 to 2023, all opening above $5 with average volume of at least 1,000,000 shares a day. They found a significant benefit in limiting the strategy to "Stocks in Play", stocks showing higher than normal trading activity that day, mostly because of company news, and results improved as relative volume rose. Their test enters on the break itself, so it says nothing about waiting for a retest, and it covers liquid stocks above $5, so it tells you little about a low-float runner. What it backs up is the filter: only trade the opening range breakout on a stock that is in play.

One from my own recap where I hesitated: on XAIR, "The stock ran from $3 to nearly $5 shortly after the open on a breakout above the opening range high, with strong volume behind it. I hesitated because I was still managing GNPX, missed the best entry, and only caught scalps between $4.25 and $4.44." The lesson I took: "When two setups trigger at once, commit to the A+ setup instead of splitting your attention between both."

For the minute-by-minute version of the open, read how to trade the first 15 minutes without FOMO.

Chasing vs. waiting on the same stock: OCTO

None of the recaps I cite here contains a breakout I chased with the numbers written down, so the chased half below is a hypothetical, built from what my OCTO recap says about that morning. The waited half is the real trade.

The setup. "By 10:00 a.m. on September 8, 2025, Octo (OCTO) was already up over 3,800% on the day."

Hypothetical: the chase. You see it on every scanner and buy at the open because it is still going up. On a stock moving like that, my recap says "the distance between a logical entry and a logical stop can be four or five dollars per share." The moving averages are nowhere near price, so there is no floor to lean on. And if it halts down, "you're locked in, unable to exit," until trading resumes, wherever that is. The recap's own version of that morning ends with blowing through your daily max loss before 10:00 a.m.

Real: the wait. I passed at the open: "I saw it premarket and said: I don't really want to play this at the open. It's so overextended." I traded other names I could read. Later, OCTO pulled back, consolidated, started forming higher lows and got tight to the 90 EMA. That compression finally gave me a level. "I took the Octo entry at $31, with a stop just below $29." That is about two dollars of risk on a stock that had moved dozens of points. "The stock halted up from there and ran to $52." My recap gives the entry and the stop but no exit, so $52 is how far the stock ran. It says nothing about what I kept, and a 3,800% day is rare. The two dollars of risk also assumed the stock kept trading through my stop. A halted stock can reopen anywhere, below $29 included, and while it is halted you can't get out. Read the full OCTO recap.

Same stock, same morning. The difference is whether a logical stop existed at the moment of entry.

Sometimes waiting means no trade at all. From my 2026 strategy recap: "NXTC squeezed over 300% in premarket before I ever sat down; by the time I saw it, the move wasn't worth chasing." As I wrote in that recap, "a move you missed is not a trade you owe yourself."

What if the breakout fails after you wait?

It will, sometimes. Waiting improves where your stop sits. Breakouts still fail. You'll see precise breakout failure rates quoted online. I have not found a primary study behind any of them for intraday small-cap breakouts. The one intraday backtest I cite above covers liquid stocks above $5 and enters on the break, so I won't borrow a number from it.

What waiting does is make the failure cheap and obvious. Your stop is a few cents under the level, so when price loses it, the loss is smaller. A halt or a fast flush can still fill you below your stop. The failed breakout guide gives price "typically two to four candles on your primary timeframe" to prove it can hold above the level. If it can't, the failure itself can become a setup. See failed breakout trading.

My exit rule on these: "if price tries to break out and instantly rejects, putting in a topping tail, I'm out full."

The no-chase checklist (write it before the open)

These are examples to adapt. Fill in your own numbers before the bell.

• [ ] The stock was on my watchlist before the open.
• [ ] I can name the level and my stop sits just beyond it, measured in cents.
• [ ] I know which entry I'm waiting for: retest, first pullback, or confirmed opening range breakout.
• [ ] I have written down what "extended" means for me (distance from VWAP, green candles in a row without a pullback).
• [ ] There is at least 2R of room to the next resistance.
• [ ] My size comes from the stop distance, set before I enter.
• [ ] If the entry never comes, I let it go.
• [ ] After the session, I mark every chased trade separately in my journal.

My patterns hub ranks the setups behind these entries against each other, so you can see which ones to learn first.

Frequently asked questions

Should I buy the breakout candle or wait?

Wait. The breakout candle sits furthest from the level you'd risk against, and as my breakout guide puts it, "If you're entering after the move already extended, you're the liquidity." Let price hold the level on a retest, give you a first pullback, or confirm on volume. My patterns hub puts it in one line: "Let the break hold on a retest before you buy it."

Why do breakouts reverse right after I buy?

Often because you bought where the late buyers were buying, far above the level, and the first pullback toward that level hits your position first. Weak volume and resistance just overhead make it worse. The fix is entry location: buy near the level so a normal pullback doesn't take you out.

What if the stock never pulls back?

Then it wasn't your trade. Some breakouts run without a clean entry, and chasing them anyway is how a missed trade becomes a real loss. The next setup is coming.

Is a retest the same as a first pullback?

Close cousins. A retest comes back to the level that broke, like the pre-market high. A first pullback is the first dip after the initial push, and it can hold above that level, at a moving average like the 9 or 90 EMA, with the trigger being a higher low and a breakout candle. On a stock that broke its pre-market high, the two can land in the same spot. Either way, your stop sits just under what held.

Do I need volume for a breakout?

You want it. A break on thin volume that stalls is one of the false triggers in my pullback guide. At the open, volume is the whole filter for me: when it confirms, I take it, and when it doesn't, I pass.

How do I know if a stock is too extended to buy?

Decide before the open, in numbers. The FOMO guide suggests three measures: distance from VWAP, large green candles in a row without a pullback, and how far price sits above the nearest level you could risk against. Once a stock crosses your limits, it's off the list for that move.

How do I practice not chasing?

On a simulator first. Mark the level, name the entry you're waiting for, and log whether you waited or chased. My patterns hub says it plainly: "Practice them on a simulator before you trade them with real money."

Watch the waiting happen live

Every weekday morning I stream my screen and mic inside the Momentum day trading chatroom, so you can watch these entries form at the open and hear why each trade is taken and what it risks. You can start with a 7-day free trial. Cancel anytime.

This content is for educational purposes only and is not financial advice. Trading involves significant risk and may not be suitable for all traders.