June 23, 2024


Epicurean computer & technology

Trading Breakouts in Forex Trading – Profitable Strategies in Successful Investing

3 min read

There are many ways to trade the forex. One of these ways is to trade a breakout method. Essentially this means there is some congestion in price after very little price activity. This can sometimes be at the end of the US trading session and in the Asian trading session when volumes begin to diminish and the major banks and players in the market have shut down for the day.

Then, once the European session opens, or there are economic news releases in Europe and the United States, volume increases and price movement can begin to liven up the markets. Generally, price will start to move quickly in one direction, or alternatively, move one way, then quickly move another way. How to capture this fast moving price action or breakouts can be tricky.

However, how does one go about setting themselves up to profit from this forex action. Using a system that has rules that you can stick by and be proven over time is one guaranteed way of doing so. If one approaches this style of trying with a haphazard approach, a trader can begin second guessing their decisions to enter a trade, where to place stops, where to exit if the price does not go in your intended direction and where to exit when you are in profit.

One such strategy to enter into markets is to use indicators that show you where price is in relation to previous price, the strength of previous price action and the intention of price to continue in a particular direction. Using moving averages and having price break those moving averages is a very robust way to show a breakout of price from a particular range. Having confirmation of the breakout with where the breakout bar closes can indicate also where price might want to go. For instance, if a bar shoots up and that price bar closes near the high of that price bar, that is a fairly strong indication that price might want to keep moving.

Making sure entry rule is place in a position that captures the continuing move is essential. Enter too early and if price turns around, you could very quickly have a losing trade. Also, placing trades with the ability to scale out of the positions is a sure fire way to long term profits. Closing out a portion of a trade once it has reached a certain profit then moving the entry to a break even ensures the trade will not lose and that it is a winner. This is a huge psychological benefit to a trader as this can greatly reduce the stress of trading once they know there is no chance of further losses.

Where to take that first profit is the eternal question. One such indicator is the average true range. This indicator will give a figure based on a certain number of bars by finding the range of previous bars and dividing them by the amount of bars you want to find the true range of. This number can give you a short term profit target that can is achievable and reached quite quickly. If price is moving in your direction, this can put your trade in profit quite quickly.

Then what to do with the remaining position is the next question. Using a trailing stop to capture any further price movement is a sound method in gaining more profits. No one knows how far price will move in a particular trade. Every once in a while, there is the huge moves that can literally make your trading balance increase in a huge chunk. Making sure you are in a position to capture that profit by using a trailing stop is a sure fire way of increased profits also.

So, how does one go about using a breakout method to profit in the forex market. Once such course available is the Forex Time Machine method by Bill Poulos. This course uses 3 methods to trade the forex across any time frame. The breakout method is but one of these methods. Bill has discovered that the forex market can be in any of 3 states of motion. One is a breakout, the other is a trending method and the other can be a counter trending mode. The forex time machine is one of the most comprehensive forex trading courses available today. With extensive training modules, risk management and trading psychology education, anyone can profit from trading in the forex with this course.

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