When a stock breaks out of contracted bollinger bands, why?

Question

is the first movement a false. What is the market psychology behind this? How can you tell if this is a false pattern or the real one before getting burned?

Answer 1

Money management and risk to reward will prevent you from getting burned.

Not every trade is a winner.

Depending on the time chart you're trading, the candlestick that breaks through the B band - when that candle is finished forming and the next candle starts to trade above the breakout's candle high - that's the entry.

The risk is the low of the breakout candlestick's low.

The reward should be the next resistance point.

If the risk to reward ratio is less then 2-1 don't take the trade.