Although you may hear some people all around the world bashing on penny stocks, the chance of profiting from those tiny stocks is still standing.
It may be unbelievable for many people, for many others, it’s a clear reality.
If it wasn’t the case you would never be here reading this post, you’re here because you know and believe you can profit like anyone else out there who’s making profits.
Nevertheless, you’ve got to know the tricks and techniques if you’re going to be one of those winners.
In this post, I’m going to elaborate with you on how you can find breakout stocks.
After all, most penny stock traders are always in one common mission, and it’s to find breakout stocks to trade in the hope of making large profits at the end of the day.
What are breakout stocks?
Although the name may suggest its meaning, a definition can always serve you better. So, what exactly is the term breakout stock?
When we’re referring to breakout stocks we’re also referring to stocks that were parked in place. A breakout stock is more of a bullish technical analysis, most traders are always on the lookout to know when one is about to take place.
A rise in a security’s price above a resistance level (commonly its previous high price) or a drop below a level of support (commonly the former lowest price.) A breakout is taken to signify a continuing move in the same direction. Can be used by technical analysts as a buy or sell indicator.
Once a stock has crossed its resistance level it’s said to be in its breakout mode. These new prices usually sustain until a new resistance level is formed which is where you’d want to get rid of your shares or acquired some depending on your case.
How can you find breakout stocks?
Similarly to many other methods that stock traders use to find potential winning stocks, identifying breakout stocks isn’t an exception.
Visual analysis and technical indicators are still going to be your best bet in this one as well. I used to think that it’s a very difficult thing for a trader to spot breakout stocks.
Fortunately, I came to realize that it’s not that difficult given that you know the basics.
First thing is to know how to read a chart, I’m assuming that you do. But if you don’t know how to read a stock’s chart this post may be able to help you.
The secret to that is to look through charts and find those that have just broken their support or resistance.
Honestly, this is the big secret to that. Once you’re able to spot such a signal and able to get on board by acquiring some shares your luck should look pretty good.
Many day traders are looking for breakout stocks to trade, although it’s a very smart strategy to use to make money, it’s important that you know how to spot them correctly.
As you don’t want to mistakenly pick a stock and start trading which could be very dangerous.
If you’re looking to start trading by investing your money into breakout stocks, know that you’ll have to be careful with your research.
Make sure the stock you’re about to pick is in fact on a volume surge, make sure the support or resistance has been broken, most important of all is to look for the factor behind the volume surge. As pump and dump stocks may look pretty similar to breakout stocks.
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