Forex Breakout Trading Strategy
Breakout trading is one of the most profitable forex trading strategy. It has the potential of making a lot of pips for you. But it can be frustrating most of the time to trade breakouts as most of the breakouts have a tendency to fail due to the lack of momentum in them. Most of these false breakouts are caused by forex brokers or other big players in the market to take out the small players in the market.
Breakout trading is all about learning how to avoid trading a false breakout. You need to develop a price filter that can help you screen a false breakout from a true breakout so that you can trade it.
This false breakout filtering strategy have been specifically developed to take advantage of strong trends in the market that make higher highs, all of a sudden make a low, fail then reverse and make new highs.
If you can find such a trade setup, it has a very high probability of success inherent in it. The reason is simple. Most of the inexperienced players tried to trade the false breakout, got their fingers burnt and were stopped out when the trend again made a u-turn. This leaves only the strong real money big players in the market who reenter the market again in the direction of the trend and push it higher or lower as the case maybe.
How to identify such a high probability trade setup? Look for a currency pair making a 20 day high. Look for it to make a 2 day low in the next 3 days. If it does make a 2 day low in the next 3 days, look for it to trade above the 20 day high in the next 3 days after making the 2 day low. If it does, enter into a long trade by placing a stop loss a few pips below the 2 day low and protect your profits by using a trailing stop.
In the case of a downtrend, look for a currency pair making a 20 day low. Once it does, look for it to make a 2 day high in the next 3 days. Once, it makes the 2 days high, if it trades below the 20 day low, enter into a short trade with the stop loss a few pips above the 2 day high. Use a trailing stop to stay in the trend as long as possible and make as much pips as you can! Good Luck!
Mr. Ahmad Hassam has done Masters from Harvard University. Get these Forex Scalping Cheatsheets plus the 10X Scalping System FREE. Download this award winning Forex Trading System that made 1,306.50% in one month FREE and watch the banned system video.
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