When it comes to trading on the currency markets there are a great many strategies that can be used. While they will all have the key objective of making you a profit the approach that they use can be very different. This can lead to a great deal of confusion, in particular for new traders, who are simply looking for a straightforward and profitable strategy with which they can make some money on their Forex account.
Of the many methods that can be used to generate regular profits from the markets, Forex breakout strategies tend to be one of the most popular. There is of course good reason for this. This particular form trading strategy offers not only the potential for making high profits on your account, it does so while also limiting many of the risks associated with trading. This is an important and often overlooked requirement for any long term profitable trading system.
Forex breakout strategies can be used in all types off markets and across all currency pairs. They are not tied to particular market conditions and also have added advantage of being able to be traded at set times of the day. This makes them ideal for those traders who don’t have the opportunity to study the markets throughout the day or simply want a set and forget system which can be used to generate regular profits from the market.
The success of the breakout depends upon the level of momentum behind the move so it is important to know how to trade this Forex strategy properly. For this reason one of the best times to trade market breakouts is when the traded volume of the market is high. The opening of a market session provides an ideal time to profit from this strategy due to the increased activity seen at this point in the daily calendar.
Often the news releases which occur at this time of day can contribute to the heightened market volatility which sees breakouts from prior market ranges occur.
One of key benefits of incorporating breakout strategies into your trading plan not only that they offer the potential to capture profitable moves, but also that they are easy to trade. This is largely the results of being able to identify the market levels that you want to trade in advance of the breakout actually happening. In addition to the identified breakout level or range, you can also plan your profit targets and the stop levels for your orders. As this work is done in advance of placing your order there is no danger of impulse affecting your trading decisions.
The secret to trading a profitable breakout strategy is to wait for the breakout to confirm before entering the market. ‘False breakouts’ are common and can catch out the eager trader who is keen to jump in before market momentum is confirmed. Therefore taking steps to confirm that the breakout is in motion is a requirement of any successful breakout trading system.
One of the best times to trade market breakouts is at the opening of the London market session. The traded volume at this time of day which follows the quieter Asian market session provides an ideal time for chart breakouts. With a well-constructed system and a good indicator to signal your traders you will be able to trade a profitable strategy in at this time in just a few minutes per day.