Breakout Trading: Setups, Volume & False Breakouts

What Is a Breakout and Why Does It Happen?

A breakout, at its most fundamental level, is a price event: the security's traded price moves beyond a level that had previously acted as a ceiling (resistance) or a floor (support) and sustains that move rather than immediately retreating. To understand why breakouts happen, it helps to understand why resistance and support levels exist in the first place.

Support and resistance levels form because human memory and institutional order flow cluster around round numbers, prior highs and lows, and psychologically significant price points. Imagine a large-cap stock on the NSE that has attempted and failed to close above a particular price level three times over two months. Each time it approaches that level, sellers who bought near that price and are sitting at break-even choose to exit, creating supply. Buyers who shorted near that level and are in profit take their gains, adding to supply. Pending sell orders from algorithmic strategies get triggered. All of this cumulative activity creates a ceiling.

A genuine breakout occurs when the demand side - fresh buyers, short-sellers covering positions, institutions initiating new positions - overwhelms that accumulated supply decisively. This typically requires a catalyst: a strong quarterly earnings result, a sector re-rating, a macro policy announcement from the RBI or central government, or simply enough time passing that weak holders have been shaken out and the order book has thinned.

From a market microstructure perspective, a clean breakout often triggers a cascade effect. Stop-loss orders placed by traders who were short above resistance get triggered as buy orders, adding fuel to the upside move. Momentum-based algorithms detect the velocity change and add positions. Retail traders watching the level on their charts pile in. This self-reinforcing dynamic is why breakouts, when genuine, can produce rapid and sustained directional moves.

Breakouts are not limited to individual stocks. They occur across all liquid markets accessible to Indian traders: Nifty 50 and Bank Nifty futures and options, sector indices, commodity futures on MCX such as gold and crude oil, currency pairs on NSE's currency segment, and smallcap or midcap stocks on both NSE and BSE. The underlying mechanism is the same regardless of instrument - price breaks free from a zone of contested supply and demand.

It is equally important to understand what a breakout is not. A stock that gaps up at the open because of a circuit breaker event or a deeply illiquid security that moves erratically is not exhibiting a classical breakout. Breakout trading as a discipline relies on liquid, actively traded instruments where volume data is meaningful, where bid-ask spreads are tight enough for practical execution, and where the price level being broken has been tested multiple times and is therefore genuinely significant.

Finally, breakouts can be bullish (price breaks above resistance) or bearish (price breaks below support, also called a breakdown). Both are valid trading setups and mirror-image versions of the same concept. For clarity, much of this guide discusses upside breakouts, but every principle applies equally to bearish breakdowns.

Classic Breakout Chart Patterns

Certain chart formations consistently precede breakout moves because their structure naturally builds energy - compressed price action, declining volatility, and a clearly defined boundary - that, when released, produces directional momentum. Learning to recognise these patterns on Indian equities and index charts is the first practical step in breakout trading.

Horizontal Consolidation or Range Breakout The simplest and most common setup: price oscillates between a horizontal resistance and a horizontal support for an extended period. The longer the consolidation, the more significant the eventual breakout tends to be, because more order flow has been absorbed at those levels. On a daily chart of a Nifty 50 constituent, a 6–8 week horizontal range that resolves with a strong volume surge is considered a textbook setup.

Ascending and Descending Triangles An ascending triangle has a flat resistance at the top and rising lows - each pullback terminates higher than the last, indicating that buyers are becoming more aggressive. When price finally clears the flat resistance, the pattern is considered bullish. A descending triangle is the bearish mirror: flat support and lower highs. These patterns are particularly visible on daily charts of midcap BSE-listed stocks and on commodity futures like natural gas on MCX.

Symmetrical Triangle Here both highs and lows converge toward a central point, reflecting genuine equilibrium between buyers and sellers. The breakout direction is theoretically unbiased - the pattern simply signals that a decision is imminent. Confirmation of direction via volume and the first candle's close is therefore especially important for symmetrical triangles.

Cup and Handle This longer-duration pattern spans weeks to months. Price forms a rounded bottom (the cup), recovers to near the prior high, then consolidates in a shallow pullback (the handle) before breaking out. The handle's consolidation should occur in the upper half of the cup's recovery. This pattern is popular among swing traders on NSE equities because it signals accumulation over a sustained period.

Flag and Pennant Continuation Patterns After a sharp directional move (the flagpole), price consolidates in a tight parallel channel (flag) or a contracting triangle (pennant). These are continuation breakout setups - the expectation is that the initial momentum direction resumes when price exits the consolidation. Flags and pennants on 15-minute or 60-minute Nifty futures charts are favourites of intraday breakout traders.

Wedge Breakouts Rising wedges (bearish) and falling wedges (bullish) involve price moving in a converging channel that slopes against the eventual breakout direction. A falling wedge during a pullback in an uptrend is a bullish breakout setup; a rising wedge during a rally in a downtrend signals a bearish breakdown.

Head and Shoulders Though primarily a reversal pattern, the neckline break in a head-and-shoulders or inverse head-and-shoulders is a classic breakout entry. The neckline acts as support or resistance; when price breaks through it convincingly, the pattern's measured move target becomes the trader's first profit objective.

For all these patterns, the key discipline is to wait for confirmation. Drawing the pattern on a chart and anticipating the break is analysis. Acting prematurely by entering before price actually clears the boundary is anticipation - a habit that inflates false breakout exposure considerably.

The Critical Role of Volume in Confirming Breakouts

Volume is the single most important confirming variable in breakout trading. Price alone cannot tell you whether a move through resistance reflects genuine conviction or is a momentary spike driven by a single large order or thin liquidity. Volume tells you how broadly participated the move is - how many parties agreed, at that moment, that the new price level was fair.

The general rule is simple: a valid breakout should be accompanied by volume that is meaningfully above the recent average - typically, traders look for volume that is at least 1.5 to 2 times the 20-day average volume on the breakout day or candle. Breakouts on low volume are the most common precursor to false breakouts because they suggest the move lacked the broad participation needed to sustain it.

In Indian equity markets, volume data is publicly available in real time on NSE and BSE trading terminals and is displayed on most charting platforms used by Indian retail traders. For Nifty and Bank Nifty futures, watching the number of contracts traded alongside price provides the equivalent signal. On MCX commodity futures, open interest in conjunction with volume gives an additional dimension - a breakout accompanied by rising open interest suggests new money is entering the market, a more bullish signal than if open interest is declining (which might indicate short-covering rather than fresh buying).

Volume Patterns to Watch

Volume dry-up before the breakout is constructive. When a stock or index has been consolidating in a range and volume gradually contracts - often visibly as a series of small candles with progressively smaller volume bars - it signals that selling pressure has exhausted itself and that remaining holders are comfortable at current prices. This compression of volatility and volume, sometimes called a volume squeeze, is the ideal condition for a powerful breakout.

The breakout candle itself should show a surge in volume. If the candle closes near its high and volume is substantially above average, that combination is considered strong confirmation. Conversely, a breakout candle that shows high volume but closes near its midpoint or lower is a warning sign - it suggests that supply appeared as price moved up and that the close was not convincing.

Post-breakout volume is equally important. In the days following the initial breakout, volume should ideally remain above average on up-days and contract on any pullbacks. This pattern - high volume on advances, low volume on pullbacks - is characteristic of a healthy breakout that is being absorbed by the market and is likely to continue.

Other volume-based tools include the Volume Weighted Average Price (VWAP), which is widely used by intraday traders on NSE. A breakout that occurs while price is trading above VWAP and the VWAP itself is rising provides additional confluence. On-Balance Volume (OBV) is a cumulative volume indicator; if OBV breaks above its own prior high before or simultaneously with price breaking resistance, that advance signal strengthens the case for the breakout's validity.

Relying on price alone without volume analysis significantly reduces the edge of a breakout strategy. Volume is, in essence, the market's way of voting on whether a price level is legitimate.

Understanding and Avoiding False Breakouts

False breakouts - also called bull traps on the upside and bear traps on the downside - are the most frustrating and costly experience in breakout trading. A false breakout occurs when price moves above resistance (or below support), induces traders to enter positions in the breakout direction, and then reverses back into the prior range, stopping out those positions. In volatile market conditions, false breakouts can outnumber genuine ones by a significant margin.

Why False Breakouts Are So Common

Several structural factors generate false breakouts. Institutional players and experienced traders are aware that retail order flow clusters at obvious support and resistance levels - round numbers, prior highs, chart pattern boundaries. By pushing price briefly beyond these levels, large players can trigger a flood of stop orders from existing positions (which in an upside false breakout means stop-loss orders from shorts get triggered as buy orders, briefly inflating price) and simultaneously absorb that liquidity to establish positions in the opposite direction. This is sometimes called a liquidity hunt or stop raid.

Market-wide news events also cause brief, unsustained spikes. A pre-market Nifty gap-up on positive global cues might push the index beyond a key resistance at the open, only for it to fade as domestic participants sell into the strength.

Filters for Reducing False Breakout Exposure

The most important filter is volume, as discussed in the preceding section. Low-volume breakouts should be treated with extreme scepticism. A second critical filter is the closing price: require that price not merely trades above resistance intraday but actually closes above it. Intraday penetrations that fail to hold into the close are classic false breakout signals. On daily charts, many traders require two consecutive daily closes above resistance before committing to a full position.

Timeframe confirmation provides a powerful additional filter. If a resistance level is being broken on an hourly chart but the daily chart shows the price is still well within a larger range, the hourly breakout is low-probability. Seeking confluence across at least two timeframes - for instance, a breakout on the daily chart occurring in the direction of the weekly trend - materially improves the signal quality.

The retest or pullback entry is a well-regarded technique for handling false breakout risk. Rather than buying the breakout candle itself, the trader waits for price to pull back and successfully retest the broken resistance level as new support. If the retest holds and price bounces from the former resistance, the trader enters on that bounce. This entry offers a more favourable risk-reward ratio because the stop-loss can be placed just below the retest level, and it provides strong confirmation that the breakout was genuine.

Pattern quality matters too. A level that has been tested four or five times over three months is far more significant than one tested only once. Similarly, a breakout from a multi-week pattern is typically more reliable than one from a two-day consolidation.

Psychologically, the discipline to avoid chasing breakouts - to watch a move happen and not enter until confirmation arrives - is one of the harder skills in trading. The fear of missing a big move often overrides the rational recognition that an unconfirmed breakout is a below-average probability trade. Implementing a rule-based checklist (volume above threshold, close above level, trend alignment, sensible risk-reward) and adhering to it consistently is more important than any individual indicator.

Intraday Breakout Trading on NSE and BSE

Intraday breakout trading - establishing and closing positions within the same trading session - is one of the most active strategies employed by retail traders on NSE and BSE. With the market open from 9:15 AM to 3:30 PM IST, there are multiple windows during which meaningful breakout setups can develop.

Opening Range Breakout (ORB) The opening range is the high and low formed in the first 15, 30, or 60 minutes of trading, depending on the trader's preference. When price breaks above the opening range high or below the opening range low with meaningful volume, it is called an opening range breakout. The ORB is one of the most traded intraday setups in Indian markets, particularly on Nifty 50 and Bank Nifty futures. The logic is that the opening range captures the initial price discovery as global cues, overnight news, and pre-open orders are absorbed; when that range is broken, it signals that the market has formed a directional conviction for the session.

The first 15-minute high and low, and the first 30-minute high and low, are the most commonly watched ORB levels. Many intraday traders avoid trading in the first 15 minutes altogether, preferring to let the market establish its range before looking for a breakout. A breakout of the 15-minute range that occurs between 9:30 AM and 11:00 AM IST with volume confirmation is typically considered higher quality than one occurring in the final hour, when positional traders are squaring off and volume patterns can be distorted.

Prior Day High/Low Breakouts The previous day's high and low are widely watched levels in intraday trading. A stock or index that opens above the prior day's high and sustains that level often signals continuation buying. Conversely, breaking below the prior day's low can trigger fresh selling. These levels are simple to plot and are tracked by a large number of market participants, which makes them self-fulfilling to a degree - the more traders who watch a level, the more significant the reaction when it is broken.

VWAP as Intraday Support and Resistance VWAP is an essential intraday tool in Indian markets. When price breaks above VWAP after trading below it for an extended period, it is considered an intraday bullish breakout, particularly if accompanied by volume. Institutional order management systems frequently use VWAP as a benchmark; a sustained move above VWAP signals that buyers are in control for the session.

Practical Execution Considerations For intraday breakout traders on NSE or BSE, execution speed matters. Using limit orders placed just above the breakout level (rather than market orders) reduces slippage. However, in fast-moving markets - particularly during high-impact events such as RBI policy announcements or index rebalancing days - prices can gap significantly and limit orders may not get filled. Setting appropriate bracket orders or stop-loss orders immediately after entry is essential. SEBI regulations require brokers to offer risk management tools; make sure to utilise the stop-loss order features provided by your broker.

Intraday traders must also be aware that positions carried beyond 3:20 PM IST without squaring off in the equity cash segment will result in delivery, which requires full capital. For futures-based intraday trades, margin requirements and SEBI's increased surveillance norms for certain securities can affect execution.

Swing and Positional Breakout Trading

While intraday breakout trading captures moves within a single session, swing traders and positional traders aim to ride breakout moves that unfold over days, weeks, or even months. This longer horizon allows the full magnitude of a genuine breakout to be captured, but it also requires tolerating overnight risk and wider stop-losses.

Daily Chart Breakouts for Swing Trading Swing traders typically focus on the daily chart as their primary trading timeframe, using the weekly chart for trend context. A breakout setup on the daily chart that is aligned with the weekly trend - for instance, a stock breaking above a multi-week resistance zone in a broader uptrending market - is the classic swing breakout trade. Holding periods range from 3–15 trading days, depending on the stock's momentum and the trader's strategy.

Entry is ideally made on the breakout day's close, or during the following day's early session if the trader wants to see the breakout candle close above resistance first. Stop-loss levels are typically placed below the breakout level itself or below the base of the consolidation pattern. The measured move concept is frequently used to set a profit target: for a rectangle breakout, the height of the rectangle is added to the breakout point to derive an initial target. For a cup-and-handle, the depth of the cup is added to the handle breakout point.

Weekly Chart Breakouts for Positional Trading Positional traders hold positions from weeks to months, and weekly chart breakouts represent potentially more significant moves. A stock that has been consolidating for three to six months and finally breaks out on the weekly chart - particularly if that breakout is above a multi-year high - is a significant event that positional traders take seriously. These breakouts reflect a fundamental shift in the stock's supply-demand balance, often coinciding with material changes in earnings trajectory, sector dynamics, or macro conditions.

Weekly chart breakouts require wider stops, typically below the consolidation pattern's low, which often means risking 8–15% on the position. Position sizing must be adjusted accordingly to ensure that the total rupee risk on the trade remains within the trader's predetermined risk tolerance - typically 1–2% of total trading capital per trade for disciplined traders.

Sector Rotation and Breakout Trading One valuable application of breakout trading for positional investors in India is sector rotation analysis. When a broad sector index - such as the Nifty Bank, Nifty IT, Nifty Auto, or Nifty Pharma index - breaks out of a prolonged range or downtrend on the weekly chart, it often signals a rotation of institutional money into that sector. Individual stocks within the breaking-out sector that have their own breakout setups provide higher-probability trades within that macro context.

Taxation Considerations for Swing and Positional Traders In India, trades in listed equity shares held for less than 12 months are classified as short-term capital gains (STCG) and taxed accordingly. Gains from equity futures and options are treated as business income. The specific tax rates applicable depend on the prevailing Finance Act; traders should refer to the latest Finance Act or consult a tax professional to understand the precise tax treatment of their trading activity. Keeping accurate records of all trades, brokerage receipts, and transaction statements (as available from NSE/BSE) is essential for tax filing.

Technical Indicators That Complement Breakout Setups

While price action and volume are the primary tools of a breakout trader, several technical indicators add useful complementary information. The key is to use indicators to confirm what price and volume are already suggesting, not to substitute for them.

Relative Strength Index (RSI) RSI measures the speed and magnitude of price changes. In a breakout context, RSI breaking above 60 (or above a resistance level within the RSI indicator itself) simultaneously with price breaking above chart resistance is a confluence signal. RSI divergence is also useful: if price is making a new high within the consolidation range but RSI is making a lower high, the breakout potential weakens. Conversely, RSI making new highs while price is still in the range can act as a leading signal.

Moving Averages Breakouts that occur while price is above its 50-day and 200-day exponential moving averages (EMAs) are generally higher probability than those occurring in a long-term downtrend. The 200-day EMA is widely used by institutional participants in India as a proxy for the long-term trend. A breakout above a consolidation range that is itself well above the 200-day EMA benefits from the most favourable trend backdrop. Moving average crossovers - such as the 50-day crossing above the 200-day (golden cross) - sometimes accompany or precede significant breakout moves.

Bollinger Bands Bollinger Bands contract when volatility is low - precisely the condition that builds energy for a breakout. When price has been trading within a very narrow band for an extended period and the bands have squeezed to their tightest reading in months, a breakout from that squeeze is often powerful. The direction of the breakout is not predicted by Bollinger Band width alone, which is why traders use the squeeze as an alert and then await directional confirmation from price and volume.

MACD (Moving Average Convergence Divergence) The MACD histogram turning positive (or crossing the zero line from below) simultaneously with a price breakout confirms that short-term momentum has shifted to the upside. MACD divergence prior to a breakout - where price makes a new low but MACD makes a higher low - is a classic signal that precedes many upside breakouts from downtrending stocks.

Average True Range (ATR) ATR measures the average daily range of price movement. It is invaluable in breakout trading for two purposes: setting stop-loss levels (using a multiple of ATR to avoid being stopped out by normal noise) and assessing whether a breakout is significant. A breakout that occurs on a day with range significantly exceeding the average ATR is notable; a tiny-range candle that barely crosses a level may not represent a decisive break.

Fibonacci Retracement Levels After a breakout, price frequently pulls back to retest the breakout level. Fibonacci retracement levels of the prior trend - particularly the 38.2%, 50%, and 61.8% retracements - sometimes coincide with the breakout level, adding significance to the retest support. This confluence strengthens the case for entering on the pullback.

The danger with indicators is over-reliance and conflicting signals. Adding five or six indicators to a chart can produce paralysis by analysis. Many experienced breakout traders use only two or three indicators, treating them as secondary confirmation tools rather than decision-making authorities.

Breakout Trading in Commodities and Currency Derivatives

Breakout trading is not limited to the equity segment. Indian traders have access to commodity futures on MCX and NCDEX, as well as currency derivatives on NSE's currency segment, all of which exhibit breakout behaviour that responds to the same technical principles.

Commodities on MCX Gold futures on MCX are one of the most followed commodity contracts in India. Gold has a strong tendency to respect horizontal resistance levels formed over weeks or months, and breakouts from these levels - particularly when accompanied by surges in traded volume and rising open interest - have historically preceded significant trending moves. Crude oil futures on MCX similarly exhibit range-bound behaviour followed by breakouts driven by global supply-demand news, OPEC decisions, or geopolitical events.

Commodity breakouts have some unique characteristics compared to equity breakouts. Open interest data is particularly valuable: in futures markets, rising open interest alongside a breakout confirms that new positions are being opened (new money is driving the move), while a breakout accompanied by falling open interest may simply reflect old positions being closed rather than fresh directional conviction. MCX provides daily open interest data for all contracts.

Seasonality is another factor in commodity breakouts. Agricultural commodities on NCDEX - such as soybean, chana, or castor seed - may exhibit breakout behaviour around planting or harvest seasons, monsoon forecasts, or government procurement price announcements. These fundamental catalysts are worth monitoring even for technically-oriented breakout traders.

Currency Derivatives on NSE The USD/INR currency pair is the most liquid currency derivative traded on NSE. The pair has long stretches of range-bound behaviour - often influenced by RBI's managed float policy - punctuated by breakouts driven by significant capital flow events, US Federal Reserve decisions, or domestic economic data releases. Breakouts in USD/INR often coincide with broader emerging market currency moves and can be tracked as a leading indicator of equity market risk sentiment.

Other currency pairs including EUR/INR, GBP/INR, and JPY/INR are also traded on NSE, though with lower liquidity. Breakout trading in less liquid markets carries higher slippage risk and is generally better suited to experienced traders.

Cross-Market Confluence Some of the highest-conviction breakout trades occur when multiple related markets break out or break down simultaneously. For example, if Bank Nifty breaks above a key resistance on the same day that USD/INR breaks below support (indicating rupee strengthening, which can be positive for equity markets) and domestic bond yields are declining, the confluence of these signals across markets adds confidence to the equity breakout setup. Developing the habit of watching intermarket relationships - equities, currencies, interest rates, and commodities - enriches a breakout trader's analytical framework.

Building and Testing a Breakout Trading System

Profitable breakout trading over the long run is not about finding one perfect setup or catching a single home-run trade. It requires a systematic, rules-based approach that has been tested against historical data and refined through real trading experience. This section outlines the process of constructing and validating a breakout trading system in the Indian market context.

Defining the Entry Rules A well-defined breakout system needs precise, unambiguous entry criteria. Generic guidance like 'buy the breakout of resistance' is not enough. A systematic trader specifies: which timeframe chart is used, how resistance is defined (prior swing high, horizontal range top, pattern boundary), what volume threshold must be met (e.g., volume must be at least 1.5× the 20-session average), whether a close above the level is required or an intraday break is sufficient, and whether RSI must be above a specified level.

Example of a defined rule: "On the daily chart, when price closes above a 20-day high that has been tested at least twice, and the breakout day's volume exceeds the 20-day average volume by at least 50%, enter at the next day's open. Stop-loss is placed below the 20-day low."

Backtesting Once rules are precisely defined, they should be tested against historical price data. Backtesting can be done manually - by scrolling through historical charts and logging each trade signal - or programmatically using platforms that support algorithmic strategy coding. NSE and BSE provide historical data through authorised data vendors and through platforms used by Indian retail traders.

Key statistics to evaluate from backtesting include: win rate (percentage of trades that were profitable), average winner versus average loser (reward-to-risk ratio), maximum drawdown (the largest peak-to-trough decline in the strategy's equity curve), and total return. A strategy with a 40% win rate but an average winner 2.5× the average loser can be highly profitable despite losing on more trades than it wins.

Be cautious about overfitting: tuning a strategy's parameters to fit perfectly on historical data often produces a system that performs poorly in live trading. Testing across different market conditions - bull markets (like 2020–2021's V-shaped recovery), bear markets, and sideways markets - gives a more robust picture of the strategy's characteristics.

Paper Trading Before Live Capital Before committing real capital, test the system in live market conditions using paper trading (simulated trades logged without real money). This reveals execution challenges - how frequently the system generates signals, how difficult it is to monitor multiple charts, how slippage affects results - that backtesting cannot fully capture.

Review and Refinement A trading system is not static. Markets evolve: new regulatory changes, shifts in market microstructure, changes in the behaviour of algorithmic participants, and broader macroeconomic regime changes all affect the performance of technical strategies. Periodic review of system performance - quarterly, at minimum - and willingness to adjust parameters while avoiding reactive changes after a short losing streak, is part of professional system management.

Keeping a Trading Journal A trading journal - recording the rationale for each trade entry, the setup type, the volume conditions, the stop and target levels, and the outcome - is perhaps the single most powerful tool for improving as a breakout trader. Over time, patterns emerge: perhaps your flag breakouts are consistently profitable while your symmetrical triangle breakouts are not; perhaps breakouts in the first hour of the session perform better than afternoon breakouts. These insights are actionable and are only discoverable through systematic recording.

Example

Key benefits

How it works

1. 1
   Identify a Key Level

   Locate a well-defined horizontal resistance (for bullish breakout) or support (for bearish breakdown) that price has tested at least twice without closing beyond it, on your chosen timeframe.

2. 2
   Wait for Pattern Completion

   If a chart pattern (triangle, range, flag, cup-and-handle) is forming, wait for it to mature and reach the point where a break of the boundary would constitute a signal; do not anticipate by entering before the break.

3. 3
   Confirm with Volume

   When price approaches the breakout level, monitor volume; require that the breakout candle's volume is at least 1.5–2 times the recent average before treating the move as confirmed.

4. 4
   Await Close Above the Level

   For daily or higher timeframe trades, require that price closes above (not merely trades above) the resistance level to avoid acting on intraday spikes that reverse by the session's end.

5. 5
   Determine Stop-Loss and Position Size

   Place a stop-loss just below the broken resistance (now expected to act as support), calculate the rupee risk per share, and use the fixed fractional method to size the position so total risk is 1–2% of trading capital.

6. 6
   Set a Profit Target Using Measured Move

   Calculate the measured move target by adding the height of the pattern (resistance minus support) to the breakout point; this provides the first logical take-profit level consistent with the pattern's structure.

7. 7
   Monitor and Manage the Trade

   After entry, watch for post-breakout volume confirmation, a successful retest of the former resistance as support, and whether price is trending toward the target; raise your stop-loss progressively as the trade moves in your favour to protect accrued gains.

Formula

Measured Move Target = Breakout Level + (Resistance Level − Support Level)
Position Size = (Capital × Risk % per Trade) ÷ (Entry Price − Stop-Loss Price)

Key takeaways

Frequently asked questions

Related terms