Trading Jobs Day Trading Strategy 2

Question 1

In a momentum breakout strategy, what confirms a valid breakout above resistance?

Accepted Answer

A surge in trading volume on the breakout candle

Answer

A genuine breakout is typically confirmed by a sharp increase in volume, signaling strong participation.

Question 2

What is a 'false breakout' in day trading?

Accepted Answer

Price breaks a level then quickly reverses back inside the range

Answer

A false breakout occurs when price pierces a key level but fails to hold and snaps back, trapping traders.

Question 3

Which strategy aims to profit from price bouncing between established support and resistance?

Accepted Answer

Range trading

Answer

Range trading buys near support and sells near resistance while price oscillates in a defined channel.

Question 4

In a 'gap-and-go' strategy, traders look to enter when a stock gaps up and then does what?

Accepted Answer

Continues higher after holding above the opening range

Answer

Gap-and-go traders enter when a gapped-up stock continues its momentum higher after holding early support.

Question 5

What does a 'pullback' entry strategy involve?

Accepted Answer

Buying a temporary dip within an established uptrend

Answer

A pullback strategy enters on a minor retracement in the direction of the prevailing trend for a better price.

Trading Jobs Practice Test