Anyone who has been trading the market for any meaningful period of time has learned many lessons that are invaluable for technical trading. One of those lessons is that trading a breakout can be one of the most profitable times to capture a big market move. With the right information, traders can receive early alerts to when a trade is about to breakout. Find out how to take a breakout trade using a predictive high and low.
What is a Breakout?
Like the name suggests, breakout trading is the practice of buying stocks or other assets as they “break out” above a prior resistance level or “break down” below a prior support level. Since support and resistance have previously acted as thresholds for the stock, when it moves beyond these levels it predicates a much larger move.
Here’s another way to think about it from the supply and demand perspective: If a resistance level indicates a glut of supply of shares of a stock at a particular price level then a breakout above that price level should mean that buyers have absorbed the excess supply above, and now those sellers are adjusting their ask prices to higher levels. This excess supply is what causes the stock’s price to go higher.
Challenges of Breakout Trading
While trading breakouts may seem like a logical approach, fundamental and value investors can find the psychological aspects of breakout trading as an impediment. For example, on an upward breakout, it is counterintuitive for a value investor to wait to buy the stock at a higher price.
A Technological Assist
So how do individual traders gain the confidence to take breakout trade? As mentioned earlier, it’s all about having the right information from the right tools. VantagePoint’s predictive indicators give you a forecast of the stock’s next day’s move.
How can VantagePoint do this? By using intermarket analysis and a neural network process to find hidden patterns and relationships between markets. VantagePoint’s proprietary indicators provide short-term trend forecasts that anticipate trend changes instead of those that lag the market. This process provides a unique perspective on markets that uses foresight instead of hindsight giving you an early indication of when a trend may breakout. Couple this with the software’s accuracy, proven to be 87.4% accurate, you’ll have the confidence to take break-out trades and hold positions throughout times of volatility.
