#BreakoutTradingStrategy

The breakout trading strategy is based on the premise that when the price of an asset strongly breaks a key level of support (a floor where the price tends to bounce) or resistance (a ceiling where the price tends to stall), it is likely to continue its movement in that direction with significant momentum.

Traders using this strategy look for assets that have been consolidating within a price range. Once the price surpasses (breaks) the resistance (for a buy trade, "long") or falls below the support (for a sell trade, "short"), they enter the market.

The key is to identify these levels and wait for a confirmed breakout, often accompanied by an increase in trading volume, which validates the strength of the movement. A significant risk is "false breakouts" (fakeouts), where the price briefly breaks a level and then reverses. Therefore, risk management is essential, using "stop-loss" orders to limit losses if the breakout does not hold.