Forex Trading – a Simple Method That Makes Huge Gains
If you are just starting out in Forex then if you base your Forex trading strategy on the following method, you will have a simple to understand methodology that works and will make big consistent gains…
The methodology is simple – buy breaks to new chart highs and lows and it works.
Because all major Forex trends start and continue from new market highs or lows and as Forex markets trend long term, these breakouts can get you in and keep you in all the big moves.
Of course most traders won’t buy or sell breakouts.
They always want to get in at a better price and wait for a retracment but breakouts of significant support and resistance don’t come back, they sail on over the horizon.
What these traders don’t realize is you have to miss a bit at the start as the breakout is confirmed but that doesn’t matter!
There is plenty more to come in terms of profit and you should not try and be perfect with your market timing, you should aim to make money and get the odds on your side and that’s what breakout trading does.
So how do you spot a good breakout?
Of course not all breakouts are equal and the key is to look for valid support and resistance and levels the market feels are important and you should do this on a daily chart many try it on short term intra day charts and the levels are not valid so it’s the daily chart and you want:
2 X tests of a level is the minimum but the more the better and the wider they are spaced apart the better. You looking for the areas the market participants will see as important and the more times its tested the more they will!
Simply wait for the level to break and then confirm the move, with some momentum indicators. These will give you an indication of whether momentum is turning up on the break and two good ones are – the RSI and Stochastic. There easy to use and give you at a glance, how strong momentum is; there quick and easy to learn so look them up and use them to confirm your moves.
Once you are in the market, your stop goes below the breakout point, the key now is to hold the stop back and trail it slowly.
Don’t move it too quickly so you get taken out by random volatility. Allow the market to breathe and accept drawdown in open equity and keep your eyes on the longer term.
Simple and Effective
Anyone can do breakout trading and win and I know traders who only trade a few times a month at most yet, make triple digit profits in 30 minutes a day and you can too. Learn to trade breakouts and you will have a timeless way of making money and enjoy currency trading success.