Breakout Strategy

Overview

A breakout strategy aims to capture strong moves when price breaks above resistance or below support. Breakouts often occur when market participants agree on direction and volume increases.

When It Works Best

Breakouts work best in trending markets, high‑volume sessions, and during major news events.

Entry Rules

• Identify a clear resistance or support level.
• Wait for price to close above resistance (long) or below support (short).
• Confirm with volume or momentum indicators.

Exit Rules

• Use ATR or recent swing lows for stop-loss.
• Target 1.5× to 3× your risk.
• Trail stops once price moves strongly in your favor.

Common Mistakes

• Entering before the breakout candle closes.
• Ignoring volume confirmation.
• Trading breakouts in choppy markets.