Breakout traders tend to
focus on trendiness combined with trading channels, and attempt to
profit from a currency that breaks above resistance or below support.
Such traders are assuming a break of
technical barriers will
lead to a continuation of the move. Breakout traders are similar to
trend traders in that they require the market to move in the intended
direction before they are willing to enter. Accordingly, this
strategy comes with the same difficulties faced by trend traders;
buying
at high prices and
selling at low prices. nonetheless, should the market actually
continue to move following the technical breach of support or
resistance, the gains could be significant. Like trend trading, this
approach to trading offers traders relatively low odds of success for
each given trade, but the hope is to catch a big enough winner to
return a profit despite numerous losses beforehand.
“I believe the very
best money is made at the market turns. Everyone says you get killed
trying to
pick tops and bottoms and
you make all your money by playing the trend in the middle. Well, for
twelve years I have been missing the meat in the middle but I have
made a lot of money at tops and bottoms.”—Paul Tudor Jones
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| Breakout traders |
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