Strategies

Many traders use breakouts and retracements as part of their trading strategy:

1. Identify Key Levels: Traders first identify important support and resistance levels.
2. Wait for a Breakout: They wait for the price to break through these levels with increased volume, signaling a potential trend.
3. Look for a Retracement: After the breakout, they watch for a retracement back to the breakout level.
4. Enter the Trade: If the price shows signs of resuming in the direction of the breakout after the retracement, traders enter the trade, often setting stop losses below the retracement level for risk management.