Breakout Trading Strategy
The breakout trading strategy is a method of trading where you try to profit when the price of an asset "breaks out" or breaches important price levels. Imagine there is an invisible wall (support or resistance level) holding the price back. When the price successfully breaks through this wall, there is often a strong price movement afterward.
Traders using this strategy will look for assets whose prices have long been moving within a certain range. When the price finally breaks through the upper limit (resistance) or the lower limit (support), they will enter the market hoping the price will continue moving in the same direction. The key to this strategy is identifying key levels and confirming a strong breakout. However, be aware of the risk of false breakouts that need caution.