Day Trading Breakouts – 4 Simple Trading Strategies

Are you a day trader? If yes, then you will definitely find this article helpful as you begin to navigate the world of day breakouts. Today we are going to discuss 4 strategies for how to trade intraday breakouts.  Before we jump into the meat of the article, let’s first align on the definition of breakouts and some of their key characteristics.

What are Breakouts?

A breakout occurs when price clears a critical level on your chart.

These levels could be a trend line, support, resistance, or a key Fibonacci level. Remember, levels on your chart are psychological and represent the sentiments of day traders at a respective price level.

When you think of day trading breakouts, what comes to mind?  Stocks making daily highs, two-day highs, weekly highs, all-time highs?  As you see, breakout means a lot of things to a lot of people. So, why do so many people lose money day trading breakouts? Why are traders constantly buying stocks when they hit intraday highs, only to have them rollover within minutes. How many times have you shorted a stock on a breakdown through a critical support level, go get coffee, come back and see the stock has bounced and you just bought a five-thousand dollar no foam, soy latte? Well, in this article I will give you the "secret" that so many breakout day trading professionals use everyday to take themselves from ordinary to extraordinary.

Biggest Misconception about Day Trading Breakouts

If I buy a breakout or sell a breakdown, I will make money, right?  If you believe this statement, immediately contact your broker, withdraw your funds and put them in a savings account.  If you follow this system, you will lose money.  Often times professional floor traders and the like will wait for stocks to break new lows, look for large buy orders in the tape and then start scooping up every share in sight. This will leave you the novice trader, looking at your screen scratching your head. Asking yourself the question, how did this happen? My technical indicators were in alignment. The stock has been below its simple moving average the last 10 bars. The last 15 bars have been down, now when I put on my short position, the stock has the bounce of its life. If you are ready to end your streak of tough trading days, continue reading.

Technical Analysis Course Videos

Just Re-Sharing:

The benefit of technology is that you can find free training such as this. For those interested in learning by listening and watching then this would be best for you. A full set Technical Analysis course videos for free.

1. Technical Analysis Course - Module 1: Technical Analysis and the Dow Theory

Basic Lesson 10: COL Financial "Charting"

This is just an overview on how the COL Financial "Charting" looks like. This is actually a continuation of Basic Lesson 4 as this is a part of quotes tab.

Okay here we go.

- Click quotes then "charting"

- It will open a whole tab exclusive for charting only (Just like the mutual fund tab).

We will break up the overview from A, B, C & D.

- (A-Orange dotted box) Once you click the tab, it will provide you all the stock code and company name of all traded companies in PSE. You can either type the stock code or select from the list.

- (A-Green dotted box) This option will enable you to analyze the stock movement in daily, weekly, monthly and or intraday movement of 1 min to 60 minutes.

- (A-Blue dotted box) This option enables you to view the charting outlook in monthly, six months  and etc.

- (B-Orange dotted box) As the box implies (Compare), you can input another stock code so you can compare on whatever stocks you selected in Overview (A-Orange dotted box).

- (B-Green dotted box) Chart provides you the option on which charting platform you want. I suggest candle stick because I don't know the others LOL.

- (B-Blue dotted box) Studies compiles maybe all or majority of available charting techniques available. I am only know some of these studies such as moving averages, volume analyis, MACD, RSI, Stochastics, MFI, Bollinger Bank, Ichimoku and Parabolic SAR. I learned everything from surfing the internet only. You can just go to my Technical Analysis Page if you want to learn some of the basic technical studies about stock market. Or I suggest you go at these following websites as I learn from them the most:

http://stockcharts.com/

http://www.babypips.com/

http://www.investopedia.com/

- (B-Violet dotted line) Once you click this icon, you can see that you can download the basic user manual. It is just an overview also. This is the link to the COL User Guide PDF Copy - Click Here.

- Once you click "select tool", you will be provided with some of the charting tools that can maybe support you in making your charting analysis beautiful hehe. You can draw your charting what ever you wanted such us putting line, cirle, rectangle, annotation, callout, doodle (free form) and etc. I think Fibonacci is one of the most important tool on this option. See all my copied notes about Fibonacci in the Technical Analysis Page. 

- Lastly is watch list which by title itself tells you what it is. Just click watch list and the "My List with Add (Plus) Icon would appear. Once you click it, "Watch List Name" a somewhat separate tab would appear. Here you can name what ever watch list name you would like to name it. And now below it, you can list all the stocks you want to save. You just have to type the Stock Code then space before writing another stock code. In my sample, I put BPI then space PLDT. Your "Watch List Name" would appear below the My List. You can edit it and you can delete it afterwards.

Okay, I think that is the overview of COL Financial.

Good Luck!