Breakout Trading
A strategy of entering trades as price escapes a range or key level, aiming to catch the start of a…
In plain English
A strategy of entering trades as price escapes a range or key level, aiming to catch the start of a strong move.
Breakout trading means waiting for price to leave a box, then jumping on board. Traders often place stop orders just beyond the edge of a range so they are filled automatically as it breaks.
It works best when a quiet period gives way to a real trend, and worst in choppy markets full of fakeouts. Many breakout traders accept frequent small losses in exchange for occasionally catching a big run.
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