Educational Article About Trading Breakouts in the Forex Market
In this article, I outlined some strategies used by professional Forex traders when the market breaks out of a consolidation range.
Learn to Trade Breakouts Like a Pro
There are two ways to trade a breakout properly. You can buy low at the bottom of the range like the trade no. 3 in figure 1, or sell high at the top of the range like trade no.1, where the price was rejected by the support and resistance, respectively. Here, you would enter at the break of the previous candle.
This way, you are hoping that by the time the price would break out, your trade would already be “in the money.” If you had taken trade no. 1 in figure 1, by the time the price penetrated below the bottom of the range, your trade would have made some decent profit on the trade. If the breakout is false, as it is, you will not lose any money. A similar situation happened with the third trade, where you would have bought at the bottom of the range, and when the real breakout happened, you were already in a risk-free trade!
You can read the full article here.