Breakout trading involves entering a trade when price moves above resistance or below support with strong volume. Breakouts often lead to sharp price movement.
Traders identify key levels using charts. When price crosses these levels decisively, a trade is triggered. Volume confirmation improves reliability.
False breakouts are common, especially in low volume markets. Proper stop loss placement is necessary to control losses.
Breakout trading is popular among intraday and swing traders due to clear entry and exit rules.
« Back to Glossary Index