Breakout Trader

Breakout Trader is a type of trader who identifies situations where the stock price is likely to experience a increase over a short period of time.

Breakout Trader

A Breakout Trader is a type of trader who identifies situations where the stock price is likely to experience a increase over a short period of time. 


Breakout Trader Identification

Breakout traders generally look for key resistance levels and will place transactions when the asset's price passes through these resistance levels. Long positions are taken when the price of an asset breaks through a level of resistance, and the resistance level then changes to a support level.

Stock chart showing an ascending triangle breakout trading

Breakout Trader APPLICATION

Technical traders may set a buy on stop above a resistance level when anticipating a strong bullish price movement.  Alternatively, the trader may wish to wait for the breakout to occur then place a limit order near the support level (ex-resistance level).  The stock price will tend to retrace to near the support level then proceed with a strong move upward.

RELATED TERMS