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IQuote Wealth. Break Out Strategy. T2. The term Break Out.
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IQuote Wealth Break Out Strategy T2
The term Break Out • The term break out refers to something that is trapped or imprisoned, the only way to be free is to break out. The intention is to have patience and wait for the imprisonment to be over. The so called imprisonment creates a pattern that can easily be detected. Technical traders look for patterns, these patters assist us in trying to determine what the majority are looking for this in turn helps us to understand what they are going to do. • In trading to a major move up or down will be (imprisoned) for some time in a certain direction. One needs to look for a break out for it to be free to move in the opposite direction. This change in direction can be called a correction.
Correction • A correction follows a major movement that is either over bought or over sold. • Over bought when an instrument rises unrealistically, and over sold when it drops unrealistically. • Once sanity occurs an over bought or oversold movement is usually pending, the major move is usually due to emotion. The correction can be determined only by a break out.
What to look for • Over sold, lower highs and lower lows • Over bought, higher highs and higher lows. • Support and resistance points are picked up by the highs and lows. Once these are broken out a reversal of the trend is highly probable. • Remember, no trade is a guarantee, always use a stop loss in the event that emotion persists.
break out Break Out Break out
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Tips for better odds • Trade 5 – 10% of capital • Take profit by editing stop • Enter only long positions on indices • Enter long and short on Forex • Wait for confirmation candle or retracement Learn more on support and resistance.