What is a breakout trade in forex?
Question:
Answer:
A breakout is generally defined as a rise or fall in share prices beyond resistance or support. In some circles, breakouts are only referred to as breakouts if they break stocks to all time highs or lows. This seems much too restrictive though and we define a breakout as a rise or fall in share prices beyond current resistance or support levels. This implies that either a new trend or a trend continuation has began again.
Breakouts are typically accompanied by a rise in volume. They can occur to the upside or the downside. This is true of most technical formations.
Then you trade by following the trend.
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