Intense

Intraday Breakout Trading Strategy

Intraday Breakout Trading Strategy : The Intraday Breakout Trading Strategy is a price movement of stock beyond an identified level of resistance. They are followed by heavy volumes and increase the amount of volatility. The traders will buy the stock when the price breaks above a certain price level of resistance. Breakout trading is an advanced trading technique that requires identifying price movements after periods of price consolidation. The market is trending as it moves sideways many traders are caught off guard. The traders look for a breakout after a period of consolidation in order to buy the price broke a resistance level. Then the breakout occurs below a support level. They can be implemented in all trading styles. The technique is flexible and traded on all charts from 1min to the weekly chart. The eclipses are establishing that support and resistance level with considerable momentum.

Breakout Patterns

1) Symmetric Triangle :-The symmetric triangle occurs when the market is in indecision mode after a strong trend.

2) Ascending Triangle :-It forms when the market price attempt to make higher highs and lower lows. Then it indicates a bullish price action. They must intersect at the trend twice before the pattern is completed.

3) Descending Triangle : - They are similar to the ascending triangle pattern and form in a bear market. A descending triangle is bound by two trend lines connecting in a downward slope trend line and a horizontal trend line connected to the low of the pattern.

4) Bull Flag :-The flags are a continuation pattern indicating a small pause in the market trend. The trend line connects these high and low near parallel.

5) Bear Flag :-A bear flag occurs as markets consolidate during a downtrend. They are identical to the bull flag but in the opposite direction. They connect to the highs and the lows are parallel.

6) Donchian Channel :-The channel is useful for measuring volatility in the market. The periods of low volatility donation channel is narrow. The narrow bands can start seeking for breakouts

Breakout trading Pros and Cons

They can be implemented in all trading styles as scalping, day trading, and swing trading. Breakout has a high probability rate when traded in direction of the main trend. It could lead to fast profit if a breakout is accompanied by momentum and volatility. The tight stop loss is close to the breakout point.

Planning Exits :-The predetermined exit is useful to a successful trading approach. While trading breakouts three exit plans are arranged prior to establishing a position.

Where to Exit with a Profit :-The recent price is easy to establish and uses a price target. If the stock makes an average price swing of four points over the past few prices the swing would be a reasonable objective.

Where to Exit with a Loss :-The breakout trading offers insight in a clear manner. The old resistance levels act as new support and old support levels act as new resistance.

Where to Set a Stop Order :-Where to exit a position with a loss uses the prior support beyond which prices that have broken. So placing a stop within these parameters is safe to protect a position without giving the trade downside risk.

Conclusion

The trading breakout is a difficult task and counter-intuitive. So to follow the strategy we need to have a strong conviction. The breakout trader aspires to become active in the marketplace before a strong trend in pricing begins. The strategy requires much patience. Breakout trading welcomes the volatility. There are a number of advantages and disadvantages to implementing a breakout trading strategy. While capitalizing upon a strong trend that may be lucrative, achieves consistent profits that can prove difficult.