“Breakout trading” refers to the strategy of buying or entering a long position when the stock price finally breaks the ‘resistance level’.
If the stock fails to break the resistance level, it is called a “False Breakout or Fake Out”.
This is where most of you get TRAPPED and lose money. It means more buyers tried to enter, but sellers pushed the price down, rejecting it.
As there is not enough momentum, the price cannot be sustained or pushed higher. This often results in further selling and a quick drop in the stock price.
Pro Tip: To avoid being trapped in a false breakout, always look for confirmation like increased volume or a strong close above the resistance before entering. Patience is key here – Waiting for a real breakout reduces the risk of fakeouts!
Want to learn more? Check out the full article on ‘Breakout Trading’ and decode this strategy today!