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

Question by ~Vengeance~: When a stock breaks out of contracted bollinger bands, why?
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?

Best answer:

Answer by guardrailjim
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.

What do you think? Answer below!