⚡ Breakout Trading — Trade After Consolidation

Breakout traders wait for price to break consolidation/resistance to enter. Logic: a break = strong buying/selling pressure, momentum continues. This is the favorite setup of top performers (CANSLIM, Minervini, Dan Zanger).

Confirmation Requirements

1) Close above resistance, not just wick. 2) Volume > 1.5x avg of last 20 sessions. 3) Resistance tested 2+ times before. 4) Beautiful pattern (Cup & Handle, Flag, Triangle).

Cup and Handle (O'Neil)

Cup: U-shape correction 12-33% deep, 7-65 weeks. Handle: small pullback 5-10% on right side. Buy point: break above cup + handle rim.

Volatility Contraction Pattern (Minervini)

VCP: multiple correction cycles getting smaller (15%→10%→5%). Volume drying up. Price at rim = pivot buy point.

Avoid False Breakouts

70% of breakouts are fake. Wait 1-2 sessions to confirm. Volume confirmation required. Avoid trading in sideway broad market.

Stop Loss

7-8% stop below buy point (O'Neil rule). Or below pivot point. Cut losses fast — never hold and hope.

Profit Targets

TP1 at 20% gain (sell 50%). Hold rest to trail-stop 50/200 MA. Big winners deliver 100-300% in 6-18 months.

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🔗 Related Strategies

🚀 Momentum Trading — Buy High, Sell Higher 🌊 Swing Trading — 3-21 Day Holding Strategy

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