Best definition of a breakout?

I am obviously new and trying to understand terms and strategies; can someone please give me a definition of a breakout, what one looks like, and how to recognize one? Thanks in advance.

I'm not trying to sound cute, but the best definition is the one that helps you make profitable trades. Do lots of testing and determine for yourself rather than take the word of people on a forum who probably haven't tested their advice. Best of luck!

Thanks for the tip.

Oldie but a goodie.
3 Closes beyond the S/R

S/R = Support/Resistence of a Recent or Previously Tested Trend Line/Price.

One other thing is that the best breakouts typically occur when there is the highest level of activity / liquidity. This is after the opens - which means the U.S. open and the European open. So look for breakouts after 3:00 AM and 9:30 AM eastern, and note that they often take 30-60+ minutes to set up and develop (after those open times), and often coincide with or occur after major news reports.

Thank you both!

mine is similar but i'm more aggresive. Once price closes beyond S/R wait for anohter close beyond the high/low of previous candle (aka, similar to orangeroshan's 1st method..anybody still remember that? hehe)

what timeframe? .

If you know my style, you would know that I backtest everything, and only draw conclusions on facts, not hunches or belifs.

You will find that the only way to define a continuing breakout is in retrospect.

The secret to trading breakouts is not to know if the breakout is going to continue or not, but:

*Limit your losses
*Ride the winners
*Reduce whipsaws that will see you make a slow death by spread / brokerage

I personally trade the breakout upon the first retrace: breakout -> pullback -> continuation. I only trade breakouts in the direction of the trend - discard if against the trend or no trend at all.

A pretty easy to recognize breakout is after price has been trending (moving in one direction, either up or down) it will move into consolidation, or 'pullback'. This occurs because traders with positions in the direction of the trend close them to take profits and those with positions that the move went against close out to cover. During this time, price does what we call range, or move in a very narrow boundary between two price levels (support and resistance).

The breakout will occur once the market has made up its mind about which direction it's going to go in - either a trend continuation or a trend reversal. When that happens, either the support or resistance price level will fail and price will move out of the previous range. As has been said already, breakouts typically occur during active trading hours and as such price will usually move out of the range with decisiveness. A typical confirmation of a breakout is when price breaks the previous swing high/low.

since we r on the topic of breakouts, i prefer those in European session

NOTE: Don't forget FXEZ advice at the beginning of this thread.

I let you think about for a couple of days. Do you still require an answer?

A BO is a BO regardless of the TF. The TF only determines your stops/targets, how often you want/can trade and how aggressive you wanna be. To me the raw definition of a BO is: after a relatively quiet period the volatility picks up and the price enters a new territory, one in which it has not been recently. There are many different ways to identify BO. Which one u use is up to u. Keep in mind however that when trading BO the most important thing is the exit. I should also add that i consider the BO to be one of the most profitable and sense making approaches to trading. Good luck!

Great one! Which timeframe do you trade?
Is this your only strategy or you use countinuation in normal trend also...mybe bounces in chanel?

I noticed you trade biger timeframes....so you dont get a lot of entry points with this strategy per week...or am I wrong...

Breakout (technical analysis)

http://www.investordictionary.com/Ap...definition.gif
A breakout is when prices pass through, and stay through an area of support or resistance.