Volatility Breakout
Volatility breakout is a trading strategy that is used to identify and capitalize on sudden changes in the market. It is based on the idea that when the market is volatile, it is likely to continue to be volatile, and that a breakout from a period of low volatility can be used to identify a potential trading opportunity. The strategy involves looking for a period of low volatility, followed by a sudden increase in price or volume, which is then used as a signal to enter a trade.
History of Volatility Breakout
The concept of volatility breakout has been around for many years, and has been used by traders to identify potential trading opportunities. The strategy was first popularized by the famous trader Richard Dennis, who used it to great success in the 1980s. Since then, the strategy has been adopted by many traders, and is now a popular trading strategy among both professional and retail traders.
Comparison Table
| Strategy | Volatility Breakout |
|---|---|
| Timeframe | Short-term |
| Risk/Reward | High/High |
| Indicators | Volatility |
Summary
Volatility breakout is a trading strategy that is used to identify and capitalize on sudden changes in the market. It is based on the idea that when the market is volatile, it is likely to continue to be volatile, and that a breakout from a period of low volatility can be used to identify a potential trading opportunity. The strategy involves looking for a period of low volatility, followed by a sudden increase in price or volume, which is then used as a signal to enter a trade. For more information on volatility breakout, traders can visit websites such as Investopedia, TradingView, and The Balance.
See Also
- Price Action
- Trend Trading
- Momentum Trading
- Range Trading
- Scalping
- Swing Trading
- Position Trading
- Mean Reversion
- Contrarian Trading
- Arbitrage Trading
