What is really a break out stocks means?
In General a break out happens when the price of a stocks goes above the marked support and resistance levels. Identify and taking trades on such stocks will improve your chances of profits in the intraday or positional trades.
If a break out stocks means buyers are successful pushed the price about support or resistance. A negative BREAKOUT indicated sellers are successful in pushing a stock price below support levels and vice versa. Now the question is how to identify the breakout stocks.
 |
| breakout stocks in intraday and positional trades |
Chart pattern breakouts
In these types of BREAKOUT there many different chart patterns like cup and handle , pole flag, ascending triangle, descending triangle, triangular patters etc. By identifying these types of patterns by analyzing stock charts can earn you good profits in intraday trading and swing or positional trading.
How you will trade on Breakout stocks?
Trading in brake out stocks are not soo easy as you think. There are two possibilities when a breakout in stocks happen for both intraday and positional trade, it can blast with good profits or there may be a false BREAK-OUT. So to avoid this, you must use a strict stop loss and also book profits with proper risk reward ratio. This very important , we do not not follow these rules there may be possible of huge loss and trading will be in loss only in long term. So use proper risk- reward ratio.
Pull Backs in BREAKOUT stocks
If you miss to Enter in a particular trade at the time of BREAKOUT then don't worry there is second chance for you. After a BREAKOUT there will be a pull back too. After the breakout there will be more chance to price to retrace , you can enter at that point with proper stop loss and target .
You may also like:- Which Chart indicators can we use for intraday/positional Trading?
Volume is important in breakout?
Increased volume at the time of breakout indicates, its good to enter and chance of false breakout will be less in that case. Better to avoid lower volume stocks breakout for intraday or positional trades. We will post another post on volume confirmation soon.
Conclusion
There is no 100% chance in brake out trades will be profit. But with proper stop loss and money management, risk reward ratio can make BREAKOUT trades profitable. For confirmation you can add your own indicators and entry point and exit points are important.