Marketing
What are breakouts and how do they work
The stock market has many trading terms that are difficult to understand and even much more difficult to analyze. The trends in stock market trading are given some significance as to how traders do their business. In fact, it seems that some psychology is used against what shows in the stock market graphs. It is agreeable that there are trends being followed like a bandwagon.
When a trend stops and there seems to be some lull, experts in the stock market draw lines on the graph to make some representations. With Breakout Trading formed on the graph from a point of previous high and previous low to a point before a stock market rally.
Point of Agreement (POA)
Usually the POA is an average price of a share of stock before it goes on an uptrend and rally. The point of agreement seems to be created from various trading prices to reach a so-called average. From the average, it suddenly shoots up to higher price where the rally takes off. The POA is like the point where the buyers’ and sellers’ prices meet.
From thereon, there would seem to be a balanced equation where buyers agree to buy at prices dictated by sellers. Jockeying between sellers’ and buyers’ price will occur to the point that a rally starts. As long as there are as many buyers willing to buy at sellers increasing price, a rally will ensue.
Is breakout trading realistic?
It is easy to draw lines from point of references in a graph and conclude a statistic or theory. Those lines do not consider emotions, need and different lines of thinking. They always want to make a trend out of something not fully understood.
Consider emotions, need for cash and other factors that can make a seller sell and a buyer buy. Trends will become unrealistic if the factors or reasons for buying and selling are considered.
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Post je objavljen 01.06.2013. u 09:05 sati.