Win Forex Trading - if You Want to Win Trade the Big Breakouts

By: Monica Hendrix

If you want to win at forex trading and enjoy currency trading success perhaps one of the easiest ways to achieve it is to trade high odds breakouts. Here we will look at how you can do this and make big profits...

What is a Breakout?

It's simply a break to a new high or low on a forex chart

Why is trading them so effective?

Because most traders hate buying them (most traders lose though) they think they have missed part of the move and want to get in at what they feel is a better price.

They wait for the pullback but of course it never comes and they miss the trading opportunity.

Why are They so Profitable?

Most major moves start from breakouts and if you hit the odds breakouts, then you have the odds on your side. Sure you miss the first part of the move but that doesn't matter if the price continues.

Which Breakouts should I Buy or Sell

You want levels of resistance that have been tested a few times (minimum twice) but the more the better. The more time frames involved and the wider they are apart the better as well.

You want levels that are considered important by the market and if a breakout occurs and it's uncomfortable, then it's likely to be a good one!

How Do I Trade Them?

To get the odds even more on your side you should check that price momentum is strengthening through the breakout point. We have covered momentum oscillators in our other articles so look them up. Two good ones to use though are the stochastic and the Relative Strength Index RSI.

Once the trade is in motion - wait for the trade to get well under way before moving your stop, then trail it up slowly, so you don't get taken out by random volatility.

The Key ...

To making money from breakouts is to trade selectively.

You get good high odds breakouts around once every couple of months in each currency pair.

Don't forget you don't get rewarded for trading often, you get rewarded for being right with your trading signal and that's it. However, these high odds trades can make 100 - 1000% so trade them.

Sounds simple - it is!

Breakouts are easy to understand and if you look at any past forex chart you can see how effective they are, you just need a simple system and the discipline to trade it and hold these high odds trades and milk them.

Any forex trader should consider using breakouts as part of their forex trading strategy, if they want to enjoy currency trading success.

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