Thread by @investage_

90% of the times, we have been trading only Breakouts - since the last 2 years.

We have compiled a thread on how to avoid FAKE BREAKOUTS. ❌

[A Thread] 🧵👇🏻
Please Like and Retweet to share our experience with maximum traders ♻

#BREAKOUTSTOCKS #priceaction #nifty50

#Breakout Trading is our favourite form of trading as - We can capture the momentum quickly & we get a defined buying level where we can take an accurate entry. ✅

Only barrier is - Fake Breakouts.

Here is how you can avoid it maximum times 👇🏻

1. Always check for high volumes at the key zone.

Eg. If you are planning to buy at a resistance breakout, look out for high volumes whenever the price has touched that particular level earlier. ⬆

This acts as a confirmation to your setup.

Example attached 👇🏻

2. Look for the Sectoral Indices 📏

If you want to buy 'X' stock, which is from the ENERGY sector, look whether the sectoral index is +ve/-ve.

If stock is not present in any index, look for the smallcap/midcap index as a whole.

Sector should be in direction of your trade. ✅

3. Your setup should have MULTIPLE TOUCHPOINTS. 📈

Remember this thing, MORE the Touchpoints, HIGHER the Timeframe⏱= More probability in your trade!

Don't try to catch a setup with minimal touchpoints.
Breakouts are generally big & successful as the TF increases.

An eg. 👇🏻

4. Always look for Consolidation before the breakout. 📌

Never ever chase a breakout, if there is a parabolic, i.e a one - sided move before the breakout.
Such breakouts would not sustain for the majority of the times and have low probability. 📉

An example of parabolic move 👇🏻

5. High volumes during the breakout - (ON LOWER TF)

This is quite self explanatory and quite common, but an important point which should not be ignored. ❌

High + increasing volumes on lower timeframe - during a breakout is a must.

These points should be at your checklist ✅ when you are trading breakouts.

This does not mean that you would never be trapped in a fake breakout, but this would increase your probability of winning in a breakout trade surely. ⬆

In the end, it is a game of probability and getting an edge over other traders!

@tushar9590 @charts_breakout @VCPSwing @Puretechnicals9 @Mr_Chartist
Kindly checkout our thread, and share if it feels valuable to you, to spread the knowledge! ♻

Disclaimer: This thread is for educational and knowledge sharing purposes only.