The breakout system is one of the best and commonly used trading strategy in the FOREX market as you can expect to deliver the best trading profits. A breakout is quiet easy to understand but it doesn’t mean or guarantee regular profits by simply using a breakout trading strategies but some of the genius and most successful FX traders do implement the one.
The whole strategy is based on currency pair trading movements if it has a tight range if the markets are not performing well for a certain period of time and sometimes it may eventually lead to the range and hence perhaps they couldn’t continue with the direction.
It states that to make constituent inflow of profit the traders need to identify the alternative and instances as currency pair trading can sometimes be in narrow range. It helps them to place the buy and sell orders in order to catch a range as in case if it happens.
With the further out look the traders need to start with the optimum set up that can use the technical indicators using 30 min, 1 hour or 4 hour chart that displays 15, 50 and 100 period exponential moving averages.
Most of the time it happens that if the price starts falling in much narrow range. While all the 3 EMA’s might flattened out and lies within the above mentioned range and it seems to be perfect as per the global scenario.
This is due to all the 3 EMA’s are slightly unbroken and have something or other to give. Once if this breakout occurs in the chart line, you could expect a good movement as the long term EMA (100) can hold a trend period for very long time and it might suggest a big points if the EMA follows the prices that might move of the current trending range.
While in regards to profit target and stop losses, it is advisable to place stops as much as it is the top or range. While in certain case of emergency the stop most of the times should follow the breakouts and shouldn’t go anywhere if the point are least at the stops.
One of the best thing of the breakout strategy, it works pretty well as in certain time frames, and it helps almost in all the other financial instruments besides trading in FOREX markets.