All traders know the anticipation of watching a price close to an important price level. This is followed by the tension that builds up as the market gets nearer and then, boom, the breakout occurs. Not every breakout is equal, though. There are those that collapse in minutes leaving traders who rushed in behind. This is why the verification of volumes is important. It assists in differentiation between genuine movements and false breakouts and this gives the trader a higher possibility of entering with faith and staying with assurance.
The volume can be termed as the gas to price movement. When a strong volume breakout is witnessed it is an indication that lots of market players are involved in the break. Such a purchase interest or selling implies that the breakout can be lasting as opposed to temporary. Conversely, a breakout that occurs with a weak volume may also reflect indecisiveness or a lack of confidence. Price in such instances, may be turned down and shot back to where it was. This is to say that being familiar with this relationship can improve the manner in which a breakout is traded, in a perceptible manner.
Breakout traders repeatedly follow a process of setup identification. They scan to find tight consolidations, flat resistance lines or touches of trend lines indicating a pressure build-up. After a breakout has happened, then they resort to volume as the second line of affirmation. A big jump in volume raises the go signal to enter. In its absence, most first-time traders would rather wait. This will make them avoid useless losses and concentrate on high probability set-ups only.
This can be managed easier with the use of tools that support both technical and volume analysis. TradingView charts is a perfect trading tool for breakout traders since it promotes clarity and flexibility at the same time. It is possible to visualize price along with volume, and employ such indicators as volume profile or on-balance volume, and set alerts for out-of-range volume. This enables traders to make decisions fast and take a step back when they should. It also assists them in investigating the correlation between price and volume throughout history, which leads to more knowledge on how powerful trends are created.
Breakouts are more than entries. The position management by the traders is also based on the volume. In case the volume has kept on increasing following entry it can be indicated that the follow-through is robust. However, in case the volume begins to decline, and price continues to move higher, it may be a reason to adopt tighter stops or expect a reversal. This continuous evaluation assists the traders to adjust to the shifting market forces and improve their decision making as the trade progresses.
Reviewing previous breakouts is quite valuable as well. Patterns might not be clear when looking at the examples of successful or failed attempts, but still, it is possible to see them. This form of review can be attained using TradingView charts, since it may replay and have clean historical data access. Trading traders will be able to experience what they would have done in past breakups and improve on it without being under the pressure of the real markets.
Finally, breakout trading is timing and confirmation. It takes time, accuracy and there must be quick execution when everything is in place. One of such pieces is volume, which provides context for the move, and such instruments as TradingView charts help to give more focus on this background. The joined technical levels with the confirmation of the volume may help the traders to make more intelligent decisions as they are evidence-oriented rather than driven by emotion.
