In order to understand what breakout trading is, you have to understand that there are two types of breakouts. Well I am going to talk about two types of breakout trading setup:
  1. Support and Resistance breakouts
  2. Swing high and Swing Low breakouts
So what is breakout trading? Simply put it, breakout trading is an attempt to enter the market once the price moves outside a defined price range (support or resistance). However, the important characteristic of a genuine breakout is that it needs to be accompanied with increased volume. A chart speaks more than words can do so here is what support and resistance breakout trading should look like: Please take a piece of paper and a pen because what you’re about to learn next is very crucial and it needs to be immortalized. In breakout trading a genuine breakout is followed by a big, bold candle that closes well above the support resistance level. In the figure above, this can be noticed quite instantly. As a rule in breakout trading the bigger the breakout candle is the better. What is breakout trading of a swing high and swing low? Well, we apply the same rules as in the case of the support and resistance breakout trading but adding one…
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