How To Trade Breakouts !!Hello everyone , as we all know the market action discounts everything :) I have created this short video to explain How To Trade Breakouts , everything you need to know about this strategy is here.
First we got to understand what is a breakout but before u start using this strategy take your time and understand the information well .
so what is a breakout : a breakout occurs when the price breaks out and closes above a resistance level or below a support level
A support line can be identified by connecting the points of low and the price bouncing back up , the support line needs 2 point to be formed but I think 3 gives a stronger signal and its safer.
the resistance line is the same as the support line but it connects the highs instead of the lows and they act as the ceiling on which the market bounce down after hitting it.
Both the Support & Resistance lines can be horizontal or angled .
so when we combine the support and resistance together we get a trading range which keeps the market price in a certain range until the price makes a break either above or below.
trading ranges are formed form the supply and demand and the market phycology so when the price breaks out of the range it signals a change in the supply and demand and the beginning of an upward or a downward trend
so lets talk about the concept of a breakout
For a breakout to happened you one need a support or a resistance line u don’t need both , but having both will create a trading range which will help you take advantage for breakouts in both directions up or down .
There are several ways to trade breakouts :
1.At the actual breakout (this could be very risky in case it was a Fake breakout)
2.Using a pending order at a higher price then the market range
3.Waiting for the conformation on the breakout.
Now lets talk about fake breakouts , it happens when the price breaks past the support or resistance level and moves back into the trading range as you see here :
waiting for a confirmation is really important as u minimize the risk you are talking , this way u will lose some of the momentum of the trend but u will insure that’s the trend is going the way you want it to go.
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Thank you for reading & watching .
