Riding a breakout

Setup

• Chart: daily or 1-hour candles showing a defined range (at least 3 touches at resistance)
• Identify the resistance level clearly — it should have rejected price at least twice
• Compare current volume to the 20-bar average — you want breakout volume ≥ 1.5× average

Entry

Long: enter on the CLOSE of the candle that breaks above resistance, provided volume confirms. Alternative safer entry: wait for a retest of the broken resistance from above (now support) with a bullish rejection candle.

Exit

Target = breakout level + range height (measured move). Take partials at 50% of the target; ride the balance with a trailing stop below new swing lows.

Stop-loss

Below the breakout level by 0.5-1×ATR. If price closes back inside the range, breakout has failed — exit immediately.

When it works

• Longer consolidation (3+ weeks) — the longer the base, the stronger the breakout
• Volume confirms — a breakout on quiet volume is usually a fake
• Broader market supports the direction (index in the same trend)

When it fails

• Low-volume breakouts — often reverse into the range within a few sessions
• Breakouts against the broader market direction
• Immediate false breakouts followed by a sharp close back inside — reversal signal, cut immediately

General trading rules that apply

Regardless of the specific setup, these apply to every strategy on this site:

• Never risk more than 2% of your account on a single trade
• Place a hard stop-loss before entering — no exceptions
• Journal every trade: setup, reason, outcome, one lesson
• After two consecutive losses, stop for the session
• Backtest and paper-trade for a month before deploying real capital