State of the Market|Reading the Psychology of the market

Breakout trading is one of the most popular trading methods used by traders. Yesterday, no new stock broke out.

Breakout Screen

Breakout Screen Analysis

Sun TV managed a bounce from breakout support and hence should be on watch list. The other stock that made a move was United Phosphorus from breakout support levels. Pantaloon Retail is near support levels and hence can be on buy list.

Breakout Watch

Keep an eye on three stocks which are trying to breakout out - i. Glenmark - any bullishness above 287 can lead to upside breakout; ii. IFCI above 63; and iii. Yes Bank above 304

How to trade Breakout?

Buy stocks when they are close to breakout support level i.e. divergence should be less than 3-4% and then ride the gains. Take partial profits once you make 8-10%; and then ride the rest. The stop loss should be placed at 3% below the breakout support price. Breakout is a high risk high reward play. Some stocks give spectacular gains while some just average and some fail.

Some Posts on Breakouts

1. How to trade breakouts?
2. Why traders love breakouts?
3. Breakouts: best Buy on Pullbacks
4. How Resistance becomes support?
5. How to subscribe Breakouts?

Disclaimer - The trading service is an educational advisory service. It is offered purely for educational purpose. Trading in stocks is a risky venture. The service provider does not accept any liability for using the service. The service provider may have positions in any of the stocks mentioned in this column.