The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “What is a breakout when trading stocks?” A breakout is just simply on a stock chart, where it looks like the stock is now moving into a new territory, a new level (if you will) and it's starting to move there quickly. And so, typically, what people look for is they look for a trigger or a confirmation that something has changed dramatically in the stock price. Now, these breakouts can occur in either direction. You could have a bullish breakout where a stock has a large move higher or you could have a bearish breakout where a stock has a large move lower. But visually on the stock chart and specifically, if you use candlestick charts, you can see this more often than not. You'll see a string of days where the stock is generally range bound and you have these small candles and small wicks and then you have this one massive day that just engulfs or encompasses many other days