failed_breakout_exit_skill

Failed Breakout Exit Skill

Data dependencies and execution prerequisites

Recommended to use Wind wind-mcp-skill to obtain underlying data. Before execution, first check whether wind-mcp-skillalready exists locally; if not, prompt the user to install:

# GitHub
npx skills add Wind-Information-Co-Ltd/wind-skills --skill wind-mcp-skill -g -y

# Gitee 镜像（国内）
npx skills add https://gitee.com/wind_info/wind-skills.git --skill wind-mcp-skill -g -y

Skill positioning

This skill is used to handle the most fatal and most common failure scenario in breakout trading: price moved up, but follow-through did not keep pace, and then it fell back and lost the key level. The output focus is not explaining why the judgment was wrong, but helping users identify false breakouts as quickly as possible, shrink risk exposure, and preserve order for another observation.

Function overview

The core function of this skill is: identify false breakouts and provide retreat actions.

It emphasizes clearly writing out failure signals, retreat order, and subsequent re-evaluation conditions, helping users quickly correct when a breakout fails, rather than delaying while clinging to the fantasy that "it might pull back up again."

Use cases

• After buying on a breakout, price falls back near the key level again.
• Price spikes on volume during the session but falls back by the close, and the user is unsure whether to act immediately.
• A lower open the next day and loss of the level clearly damages the breakout logic, requiring rapid correction.
• The team wants to codify the false breakout exit mechanism into standardized discipline.

Working principles

1. The core of a false breakout is not "how much it fell," but "whether the breakout premise has been broken."
2. Failure retreat must prioritize handling risk, then emotions and explanations.
3. It is necessary to distinguish a normal pullback confirmation from a genuine failure pullback.
4. After retreating, re-observation conditions must be retained to avoid turning correction into emotional retaliation.
5. The main text only provides the identification and action framework, and does not discuss the internal implementation process.

Execution process

Step 1: Confirm the original breakout premise

First return to the original conditions under which the trade was valid:

• What were the key level, volume, and environment on which the breakout depended at the time
• Which part of the premise is broken by the current price pullback
• Was this trade originally a trial breakout or a confirmed breakout
• Is there still reasonable room for a pullback confirmation explanation

Step 2: Identify the signal levels of a false breakout

Divide failure signs into different severity levels:

• Price spikes and falls back during the session but still closes above the key level
• Close falls back below the key level
• A lower open the next day and continued weakening
• After a volume spike, there is almost no follow-through, forming obvious selling pressure

Different levels should correspond to different action intensities.

Step 3: Distinguish normal pullbacks from failure pullbacks

Avoid treating every pullback as failure, but do not console yourself either:

• Does the pullback show shrinking volume, follow-through, and rapid repair
• After falling back below the key level, can it quickly reclaim it
• Do the sector and environment still support another attempt
• If the volume-price structure has clearly deteriorated, is it no longer worth waiting for

Step 4: Design the order of retreat actions

Once it is confirmed that failure risk is rising, action priorities should be made clear:

• Is it to cut by half first or exit all at once
• If failure is confirmed near the close, should overnight exposure be reduced
• If a lower open the next day further loses the level, should the remaining exit be executed directly
• Whether to keep a very small observation position, or clear everything and wait for a rebuild

Step 5: Add re-evaluation conditions after failure

Failure handling does not mean blacklisting forever; it is necessary to write clearly under what circumstances it can still be looked at again:

• Reclaim the key level and receive support
• The sector strengthens again
• A new catalyst appears or a better structure forms
• The volume structure improves again

Step 6: Form the final draft of the false breakout retreat

The final output should help the user know "is this noise, a pullback, or a failure; if it is a failure, how to exit; after exiting, when to look again." The main text retains signal grading, retreat order, and re-evaluation conditions.

Output structure

---

False Breakout Retreat Plan ({YYYY-MM-DD})

I. 30-second conclusion

• Trading target: {stock name}
• Current status: {normal pullback / high risk / confirmed failure}
• Handling bias: {continue observing / reduce position first / clear exit}
• Key invalidation signal: {one sentence}
• Whether to retain eligibility for re-observation: {yes / no}

II. Failure signal grading

Level	Phenomenon	Meaning	Suggested action
Mild	{content}	{content}	{content}
Moderate	{content}	{content}	{content}
Severe	{content}	{content}	{content}

III. Retreat action sequence

• {action 1}
• {action 2}
• {action 3}

IV. Re-observation conditions

• {condition 1}
• {condition 2}
• {condition 3}

V. Risk notice

• {risk 1}
• {risk 2}
• {risk 3}

---

Quality requirements

1. Must distinguish between a normal pullback and a failed decline.
2. Failure signals must be divided into levels, rather than only a binary judgment.
3. Retreat actions must be written clearly in sequence.
4. Re-observation conditions must be specific to avoid emotional repeated entries and exits.
5. The output should help quickly correct mistakes, rather than prolonging the period of wishful thinking.