Sunday, June 28, 2009
Super Long-term Breakout Strategy
Why do I call this strategy the super long-term breakout strategy? Well, it is because this strategy is used for long-term trading and it is very profitable.
The concept is simple. When a breakout occurs and the breakout is from a very very strong and long-time support or resistance, the price will 90% move further and further past the support or resistance, creating a super strong trend in its direction.
So what is this strategy? Simple. When you see such breakout, wait for a while to make sure it is not a fake break, and then trade in its direction! Of course, you can do some indicator analysis or candlesticks for confirmation but then again, when there is such a breakout, you know you will have some high chances to reap some long-term profits.
Wednesday, June 10, 2009
Small Breakout Strategy
With this Breakout Strategy, I am for only a few pips. Let’s say maybe just 15 to 20. I normally check for consolidation periods where the price is neither trending up or down and is just zig-zagging horizontally. So, we all know that when the market is moving like that, it will break the consolidation and start a trend sooner or later. But we just do not know when.
So use your own analysis to determine which direction the market will move when it breaks out. You can use your indicators to help you. I will not go in detail about this here. Then once you have an idea, place a limit order. For example, if you think the market is going to drop when it breaks, put a limit sell and when it drops, your trade would be entered and after 10-15 pips, you take your profit.
This is one of the basic Breakout trade strategies. I do not use this often though. Identifying the perfect situation for this strategy is a bit tiring unless you know specifically what time of the day you can see a consolidation market that will be breaking out soon…
Bank Opening Breakout Strategy
Trading on Breakouts is a profitable way when done right. When a market goes into consolidation, which means it is neither going up or down, it can breakout at anytime. This means that it can stop consolidation and then move very fast up or down. When that happens, we have a breakout and if we trade in the correct direction, we can achieve a huge profit.
A very good way to minimize risks when trading Breakouts is to trade when the banks open. This strategy is not basic but here’s the concept. When banks open, they will be doing cash transfers and such. During that time, a lot of cash maybe flowing and this will cause a currency’s value to drop or rise without turning back. So, you need to identify the bank opening times. Then wait for that hour and see which direction the market will move. Normally, before the bank opens, there will be a consolidation and when you see a breakout, wait for a while to be sure of the breakout direction. Then trade! There are many more factors to take into account like timing, Stop-Loss, Take Profit and etc and I will not cover them here. I’m just giving the basic concept.
Also, it isn’t everyday that this will happen. Sometimes, when the banks open, there will be not much movement in the price, making you wait for nothing.