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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