In this video you'll learn that breakouts are hints and clues that the human psychological reaction has been activated. At the first sign of a strong breakout or movement, the emotions to do something just becomes intense.
Below are the steps to understanding a breakout :
1. Identify the Setup
Take some time to truly understand what kind of setup you're dealing with. Is this going to be a Range Breakout? Is it going to be a Trendline Break? Will it be a Channel Breakout? Or are we working with a Support and Resistance Breakout? Each trading set up has so much detail that we sometimes just tend to overlook it. An example is when working with a range we know we first require 4 points of reference with no Higher High and Lower Low sequence.
2. Get a Clear Understanding of the Timeframes Above
A very common attribute to dealing with breakouts is, when a strong breakout happens, just above or below the breakout zone will be a major support and resistance level from the big boys. This little piece of information is overlooked by many of the traders I've come across. This information will be helpful to understand if the breakout that occurred has any chance to succeed to begin with. Knowing this information ahead of time can make all the difference in a losing trade or a winning trade.
3. Feel Your Opposition Throw in the Towel
If you're looking to sell, follow what the buyer is doing every step of the way until they call it quits. When your opposition starts exiting their positions you have less roadblocks ahead of you. This is probably the most important core in trading which I've seen many of my mentors and traders I have studied, look at. They love to get into the head of the opposition to see and wait patiently for the right moment to move in.
4. Up Your Game
Breakouts will generally get you entering late into the market. If you focus on the 3 points above, you might be able to grab a entry before the breakout as shown in the video. Learn to up your trading game every day. Practice, learn and be hungry for more knowledge and skills. Trading constantly evolves, your approach to the markets should be able to adjust as well.
Watch the video above for the full lesson so you can continue to enhance your skills and be better everyday.
Be conscious of your trading!
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