---
title: 'Best Breakout Trading Strategy (Must Know)'
source: 'https://youtube.com/watch?v=nVNSAoFKKOk'
video_id: 'nVNSAoFKKOk'
date: 2026-08-05
duration_sec: 768
---

# Best Breakout Trading Strategy (Must Know)

> Source: [Best Breakout Trading Strategy (Must Know)](https://youtube.com/watch?v=nVNSAoFKKOk)

## Summary

This video presents a breakout trading strategy designed to capitalize on significant price movements. The presenter explains how to identify key support and resistance levels, avoid false breakouts, and manage trades with a two-step profit-taking system. The strategy is illustrated with chart examples and emphasizes the psychological and market dynamics behind breakouts.

### Key Points

- **Definition of Breakout** [00:30] — A breakout occurs when price breaks beyond a key support or resistance level, often leading to a trend. Example shows price moving within a range, then breaking out and trending.
- **Finding Breakout Setups** [01:13] — Instead of memorizing pattern names, focus on identifying key levels. Patterns like rectangle, pennant, wedge, and triangle are all based on price consolidation and key levels. Draw trendlines from multiple rejections.
- **Avoiding False Breakouts** [03:25] — A common mistake is entering at the first breakout. Breakouts don't always lead to trends; false breakouts occur. Use a momentum candle (big or multiple medium candles) as confirmation. Wait for the next candle to confirm.
- **Three Scenarios After Breakout** [05:43] — After a confirmed breakout, price can: 1) continue trending, 2) pull back to the key level then continue, or 3) reverse (false breakout). Position yourself to benefit in all scenarios.
- **Entry and Stop Loss Strategy** [06:09] — Enter at the momentum candle's close, set stop loss slightly below the key level. This ensures profitability in scenarios 1 and 2, and limits loss in scenario 3.
- **Two-Step Take Profit System** [07:06] — Step 1: Set a fixed profit target at 1.5x stop loss. When hit, close half the position and move stop loss to break even. Step 2: Apply chandelier stop indicator with ATR value 2 to let the remaining half run.
- **Real Chart Example** [09:01] — Demonstrates the strategy: identify triangle pattern, wait for momentum candle (multiple red candles), enter short, set stop loss above key level, apply two-step take profit.
- **Why Breakouts Happen** [10:32] — During consolidation, buyers and sellers are balanced. A breakout shifts power, triggering stop losses and attracting breakout traders, amplifying momentum. Psychological factors drive the move.
- **Best Assets for Breakout Strategy** [11:40] — Works well with assets that make sudden large moves, like cryptocurrencies. The sponsor, PrimeXBT, offers low-fee crypto trading.

### Conclusion

The breakout strategy focuses on identifying key levels, confirming breakouts with momentum candles, and using a two-step take profit to maximize gains while managing risk. It's applicable to volatile assets like crypto and emphasizes patience and discipline.

## Transcript

breakout trading strategy that can help you profit from huge price movements now before we continue kindly give me 10 seconds to talk about the sponsor of today's video primex bt an award-winning trading
platform that offers extremely low fees you can register using the code data to earn 50 extra capital on your first link in the description below now back to the video
so first what is a breakout actually a breakout simply refers to when the breaks beyond a key support or resistance level movements let me show you an example so in this
we can see that the price is moving within a range and so we can place a level of resistance above and a level of support below here as price rejected it multiple times
now notice as soon as the price broke out of the key level the market started trending and this would have been a good buy entry now the question is how do we find setups like this where the market can
potentially break out well a simple way to do that is by i'm sure most of you have seen these patterns before we have the rectangle pennant wedge triangle all sorts of patterns
now a common mistake that traders make when looking at this pattern list is that they're waiting for the market to make the exact same movements as the for example they look at the wedge pattern and they'll try to find candles
exactly the same as this if you're still doing this single pattern because the truth is prices don't move like this in real life so instead what you want to focus on is
finding the key levels let me give you an example so here as we look on top of the charts we can see that the price is forming lower meaning we can draw a downward strain line above it because again
there are multiple rejections next as we look below the chart we saw more rejections and so we draw a support line below here now if you look closely we actually just found a triangle pattern
downward trend line and a support line so this concept also applies for other patterns as well if you spot a support and resistance if you spot a support and resistance level then it's a rectangle pattern
if you spot two opposite trend lines it's a pennant heading the same direction it's a flag pattern and so by knowing concept you don't even need to memorize the name of the patterns
wedge or a rectangle at the end of the day all of them are based on one concept price consolidates forms key levels then breaks out so as long as you can find these key levels
find these key levels the strategy would still work now pattern the next step is predicting the direction of the breakout will it happen to the upside or the downside so a common mistake that
is that they immediately take a position at the first breakout that they see at the first breakout that they see for example here we spotted both a level of support and a level of resistance meaning we
just found a rectangle pattern next we can see that a candle closed slightly above the upper level now traders would look at this and think oh the price broke above the level and so the breakout will surely happen
to the upside well this is actually the wrong mindset to have because a breakout doesn't equal a trend there's always a possibility of it being a false breakout
that's when the price broke above the key level only for it to come back down so if you took a buy position here you would actually lose money and so how do we avoid these false breakouts
well a simple trick that i like to use to avoid false breakouts the breakout a momentum candle could be in the form of a big candle or multiple medium-sized candles
let me show you an example so in this chart we can see that the price is forming lower highs meaning we can draw a downwards trend line above here and below it we spotted higher lows
here as well and now we just formed a pennant's next we saw that a big green candle broke above the upper trend line but if you look closely
bottom and only a small part of it broke out so for situations like this we need to have further confirmation by waiting for the next candle to form if it happens to be another medium-sized
green candle then it counts as a momentum candle but unfortunately it was a red candle that formed instead so we ignore this signal next we saw that a big green candle broke out
but this time a big part of it broke out so this [Music] now there are three scenarios that could formed first the price continues to trend
second the price makes a pullback towards the key level towards the key level before continuing upwards and third the price reverses downwards and this counts as a false breakout
and so what should we do should we wait for the price to make a pullback before entering or should we just enter right now well personally instead of trying to predict what will happen next
what i like to do is position myself so that i'll always have the edge do is i'll enter a buy position at the momentum candles close and set my stop loss slightly below the
so by doing this i'll still benefit in every scenario if the first scenario happens and the price continued upwards i will end up being profitable if the second scenario happens
where the price pulls back towards the key level before continuing upwards would still end up profitable and if the third scenario happens where it's a false breakout my stop-loss will get hit
money now after entering a buy position and the next step is where to set your profit target so first you need to remember that in a breakout setup
prices tend to have larger upsides so if we're using a fixed profit target of 1.5 times your stop loss we are basically limiting our upside potential and so to make sure that we benefit if the price were to make a huge movement
two-step works so the first step is you want to set a fixed profit target at 1.5 times your stop loss next
if the price hits the first profit target instead of closing all of your positions you only close half of it then you want to move your stop loss to break even so now you still have the remaining half
of your positions open with the new stop loss in place now profit system so for this next step you want to apply what's called the chandelier stop indicator
next go to settings and change the atr value by two so now all you need to do is let the remaining half of your trades run
you close your remaining position and take profits notice that by doing this we were able to benefit when the price made a huge because half of our positions are still open if we closed all of our positions
we would have missed this upside potential and in this example we can also see that the price went straight up without forming a pullback this is why i prefer to enter positions right away
because most breakouts actually happen without a pullback pullback to happen before entering a position chances are you will miss many profit potential
in action in this chart we can see that the price is forming lower highs meaning we can draw a downward strain line above it and as we look below we also spotted a
level of support because of these multiple rejections so we just formed a triangle pattern next a medium-sized green candle just broke above the key level however
momentum candle and so we ignore the signal then we can see that a red candle broke below the key level momentum candle and so we ignore the signal once again
you can see multiple red candles that formed after that so these multiple candles count as a momentum candle so we take a short position now for your stop loss
you place it slightly above the key level and apply the two-step take profit system so step one place a profit target at 1.5 so step one place a profit target at 1.5 times your stop loss
move your stop loss to break even and continue with step two apply the chandelier stop indicator and change the value to 2. then all you have to do is let the remaining trades run
once this happens you close your position to ask is why do breakouts happen what's the logic
behind it well let me explain when prices are on a period of consolidation it means that both buyers and sellers are equally strong but once a breakout happens let's say to
the downside all of a sudden sellers are now stronger and because sellers are stronger buyers who bought at the support level because most of the time a stop loss is placed near a key level
out plus sellers keep pushing so the downside momentum becomes much stronger not to mention breakout traders like us
join in so all these factors combined causes the price to push lower and lower which causes a breakout pattern to form there's always a psychological reason
behind it another question that people tend to ask is which asset should i trade the strategy with well if you think about it a breakout strategy will work very well with an
that likes to make sudden huge movement an example of that would be cryptocurrency and so if you need a trading platform that offers crypto trading at a very low fee you can check out today's sponsor
prime xbt which is an award-winning trading platform that gives you instant access to over 30 plus assets including crypto forex indices and commodities it offers very low fees
ranging from point zero zero one percent for forex pairs and point zero five which makes this the perfect platform for scalping and day trading and exclusively for data trader viewers if you sign up using the code data
you will earn an extra fifty percent bonus capital on your first deposit thousand dollars they will give you an extra five hundred clicking the link in the description below
much for watching and i'll see you in the next video