Hello! Dear forum member's here I am sharing some strategies that traders use to enter in a breakout. Hope It'll help new traders to understand how to enter into a breakout.
There are the 3 way in which traders enter in breakouts and these are:-
1) At the actual break out
2) Pre-set price level as a pending order
3) Wait for conformation candle
Let see what are these trading styles used by traders to get into breakout.
1. At the actual break out
At this point traders prefer to get into the “buy” position instantly after the resistance is breached, hoping to profit from the full upward movement. This is the most risky because there is a phenomenon may be associated at this point called “Fake BreakOut”.
If such a fake break out occurs then the price won’t continue to move upward instead it will return to the below resistance level and get into the “trading range” which is the area between support and resistance levels.
2. Pre-set price level as a pending order
Some trader those are not focused on current price fluctuation use pending order instead of getting into the buy position instantly. The pending order can be placed using indicators like Fibonacci or by analyzing past break outs. This order is less risky than the previous one.
3. Wait for Conformation Candle
The third type of entry is least risky to enter into a breakout which will requires patience. It involves watching the market for the best time to enter the trade. In this types of order trader looks for the time when the current candle sticks closes above the resistance level to achieve a new high. If you don’t want to take high risk then this trading style is best for you.