We all love to read and analyze trends in the financial markets, and at some point every single one of us thinks, wrongfully, that he/she is a prophet, only to get stopped out and lose money and feel like an idiot. So how do you avoid the pitfalls of buying into false breakouts and insure that you’re part of a trend that has already formed rather than trying to predict one that your gut tells you is going to happen? Here are a few pointers to keep you from crashing and burning:

1. Await confirmation on every single trend that forms. If you see an ascending triangle forming on a currency pair or a stock that you are interested in buying, don’t buy on the triangle, buy on the breakout. Once the price moves at least one ATR outside the range of the original congestion area, you can confirm a trend is forming rather than trying to predict that one will. Don’t try to predict a nonexistent future: trade in the present and await confirmation before entering.

2. Check multiple time frames on every single trade. When you trade the hour charts, look up at the day charts to make sure a proper trend is being formed on both time levels. It’s important because the heaviest support and resistance points always exist on the highest time frames and for the longest time, so any catalysts you might anticipate on an hour chart would be easily overridden by catalysts on the day chart. Keep this in mind before you pull the trigger.

3. Make sure your trend correlates with the market as a whole. If this S&P 500 is on a massive bull run today, don’t go short. Play similar patterns with whatever the market as a whole is doing.

4. Trail your stop as the trend forms. Don’t buy into it blindly and hope for the best. Create trail stop orders and OCO brackets to keep yourself from realizing a terrible loss.

5. Don’t take it personally. The market is a blind accumulation of crowd psychology, and isn’t out to get you no matter how many bad trades may make you feel like it is. So just shrug your shoulders when you lose and don’t let yourself get injured about it when you happen to be wrong.