Strategy 4: Trading the Failed Breakout
We’d be remiss if we didn’t touch on the topic of failed breakouts. As a day trader, you’re going to have your fair share of trades that just don’t work out. It’s just part of the game.
So, how do you know when a trade is failing? Simple answer – you can see the warning signs in the volume.
IF YOU DID NOT UNDERSTOOD ANY TOPIC OF THIS LESSON SO JUST CHECK ON BOTTOM SIDE THERE ARE ALL THE BASICS CONCEPT OF ALL THE TOPICS JUST CLICK ON IT AND YOU’LL ABLE TO UNDERSTOOD ANY TOPIC EASILY.
Let’s dig into the charts a bit.
Above is the chart of Chipotle Mexican Grill. You can see the stock attempted to break out in the first hour of trading.
Notice how the volume on the breakout attempt started with good effort, but then faded off. With this signature, you shouldn’t be surprised when the stock begins to float sideways with no real purpose. While this would have been a break even trade, more or less, your money is idle. At least you wouldn’t have taken a loss on this one.
ALSO IF YOU WANT VIDEOS FOR MORE DEEPLY EXPLANATION OF ANY TOPIC SO PLEASE …………DO COMMENTS (ANY TOPIC YOU WANNA UNDERTOOD) YES SIR WE WANT YOU TO PLEASE MAKE A VIDEO ON ………..THESE FOLLOWING TOPICS..!!! I’LL DEFINITELY WORK ON THIS AND SHARE IT WITH YOU…!!!
The next example was worse.
The above example of DKNG failed to follow through to the downside, despite gapping down on considerable volume.
Notice how the volume dries up as the stock attempts to make a lower low on the day and break the first bar. The key is to get out if the price action begins to chop sideways for many candles.
When you sit in a stock hoping things will go your way, you are better off making a donation to charity. At least the money will go to a worthy cause.
In Summary
- Breakouts often fail
- If the volume dries up on the breakout, look to get out within a few candles if things don’t turn around
- If you want to play the reversal, wait for a few candles to see if the peak holds and enter a trade counter to the morning gap
- You can use the peak of the first candlestick as a logical point to exit the trade
4 Strategies Conclusion
The strategies discussed in this article can be used with any stock and on any time frame. The most important point to remember is you want to see volume expand in the direction of your trade. Keep this in the back of your mind and you will do just fine.
I HOPE YOU ALL UNERSTOOD THE VOLUME ANALYIS CONCEPT FROM BASICS. IF YOU HAVE ANY DOUBT PLEASE DO COMMENT AND IF YOU WANT ME TO EXPLAIN SOME PARTICULR TOPIC SO YOU CAN ALSO ASK WITH US.
AND KEEP VISITING ON DAILY BASIS GUYS IT,LL HELP YOU TO UNDERSTOOD ALL THE BASIC CONCEPT OF STOCK MARKET.
ALSO IF YOU WANT VIDEOS FOR MORE DEEPLY EXPLANATION OF ANY TOPIC SO PLEASE …………DO COMMENTS (ANY TOPIC YOU WANNA UNDERTOOD) YES SIR WE WANT YOU TO PLEASE MAKE A VIDEO ON ………..THESE FOLLOWING TOPICS..!!! I’LL DEFINITELY WORK ON THIS AND SHARE IT WITH YOU…!!!
WHAT WE CAN TEACH YOU NO BODY WILL TEACH YOU…!!!
JAI SHRI RAM…!!! 🙂