Forex Breakout: Why are they so profitable?
Most people know what is a forex breakout strategy| forex breakout system | forex breakout trading |breakout trading forex | forex breakoutsWhat ever name they call it. It is the same.
Forex breakout to name it simply is that – we are seeing that price| the forex market is consolidating for a long time. And we are capturing the big move once it eventually breakout from its consolidation.I know of alot of full time traders who only trade one pattern. It is the forex breakout strategy.Why? The reward is great and the risk is low.By taking just 5 forex breakout trades a month would equate to very good money.
However, if traded wrongly or picked wrongly. They would only get a spike up/down and then to make a loss as the pair didn’t break out.
Forex Breakout: Why are they so profitable?
In the chart above : Forex pair Usd ChfWe can see that the overall trend for the pair is a down trend.And in the past few days, weeks (from start june to mid july) – It has been consolidating in a box for a long time.When we see such setups, we know that price will eventually breakout from the consolidation into a big move up or down.And in the scenario, it will most likely be down as the overall trend for the pair is down. ( pretty simple right )
Forex Breakout: Why are they so profitable?
How to play the forex breakout trade:
It’s simple, we will play a pending sell order (yellow dotted line) right below the low of the previous low.
And our stop loss ( pink dotted line ) will be placed above the entry, behind several bars so that we will have a good resistance if price heads back up. Since price is making a new low. There is no previous data on how low it will come to. Therefore, we will take our first profit off the table when the bar eventually breakout and closes.(marked by take profit 1)And we will be trailing it for our take profit 2. So you can see from this quick scenario of how easy it is to play a breakout trade and the risk reward is great.
If you mastered this forex breakout strategy alone, you will be making good profits in forex trading already. But this is just one of our forex trading strategies we teach.
Check out our online forex trading AFM winning Price Action Forex Trading Course where i teach you the exact FULL Forex Trading System & Strategies that i personally use to be consistently profitable.
See you on the other side my friend,
Asia Forex Mentor
Ezekiel Chew
Asia #1 Forex Mentor
www.lifeofatrader.com
Next Advanced Article: forex breakout system (part 1)
