The Daily Breakout Strategy
|This article written by Maite Krausse was originally published in the november 2014 issue of Traders' Magazine.
- Maite Krausse has been interested in the stock markets since taking her degree in business administration. Today she is a professional day trader and is specialised on forex. Her husband and Maite offer professional support to traders – finding daily trading signals, analysis and tips.
How to Trade Breakouts in Forex
It is always the same question for traders of all experience-levels in Forex: Which strategy achieves the most profit and which trading system will save the account in the forex market? We cannot promise the Holy Grail, because it simply does not exist in trading. But there is a helpful strategy that achieves high profits in volatile market phases: the breakout strategy.Simple Approach – Huge Effect
Entries
We observe the price range between 12 am to 8 am CET in the 15-minute chart. During this time we determine the highs and lows. We enter two to five pips above the high or two to five pips below the low. Furthermore, we look at support and resistance levels in the hourly chart. We determine sell orders above resistance and sell orders below support.Exits
Greed is one of the cardinal sins in trading. But every trader knows the feeling of a trade in profit and you want to achieve even more pips. This is a very human feeling and therefore you need a strong trading plan with fixed take-profit rules. We calculate it based on the RRR and we follow it strictly. For example, we can determine the stop-loss (SL) at 20 to 30 pips. The take profit (TP) is determined at 40 to 100 pips, depending on market fluctuation. We choose a smaller TP in quiet market phases and a higher TP on days of interest rate decisions and other big events. If a trade is stopped out with a loss, we can re-enter on the same day, again with a pending order. The breakout strategy is now clearly determined and that helps the psyche of the trader – cancelling out greed and fear. You should always follow your entry and exit rules and you should accept false breakouts or huge profits after your TP.Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.