Breakout Trader


DEFINITION of 'Breakout Trader'

A type of trader who uses technical analysis to find potential trading opportunities, identifying situations where the price of an asset is likely to experience a substantial movement over a short period of time. Breakout traders generally look for key levels of support and resistance and will place transactions when the asset's price passes through these levels. Long positions are taken when the price of an asset breaks through a level of resistance, and short positions are taken when the price breaks below a level of support.

Breakout Trader

BREAKING DOWN 'Breakout Trader'

Many breakout traders find trading opportunities by identifying chart patterns such as channels, ascending triangles, descending triangles, head and shoulders, etc. These types of traders will generally set up target prices to be equal to the distance between support and resistance levels.

  1. Long (or Long Position)

    1. The buying of a security such as a stock, commodity or currency, ...
  2. Breakout

    A price movement through an identified level of support or resistance, ...
  3. Triangle

    A technical analysis pattern created by drawing trendlines along ...
  4. Head And Shoulders Pattern

    A technical analysis term used to describe a chart formation ...
  5. Resistance (Resistance Level)

    A chart point or range that caps an increase in the level of ...
  6. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
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