Breakout Trading is the most underrated trading technique in the trading community!

Every trader (intraday, swing, positional, or scalper) should know how to differentiate between a genuine breakout and a false breakout.

Do you know why?

Read this thread!

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It’s important to understand two herds that exist in the market:

1. Smart Money &

2. Dumb Money

‘Smart Money’ refers to big sharks who have money & information power who give direction & momentum.

‘Dumb Money’ refers to retail traders who often try to make quick money.

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You should know one secret now.

Participation from smart money creates a "genuine breakout."

And the absence of smart money participation results in a "false breakout."

Hence, it is always a good idea to follow smart money (by knowing real or false breakout)

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What is Breakout?

As per Investopedia

“A breakout is a stock price moving outside a defined support or resistance level with increased volume. A breakout trader enters a long position after the stock price breaks above resistance.”

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The price broke the resistance trend line with high volumes in this image.

Similarly, few recognize it as a breakdown if the price breaks the support trend line.

To keep it simple, we will focus only on the breakout.

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