Forex Breakout Trading Made Easy

There are only three ways any forex traders can trade the market. Either you decide to go for Forex Range Trading, Forex Breakout Trading or Forex Swing Trading. Anyone of this can be equally profitable if you know how to trade properly.

In this post, I will be focusing on talking about forex breakout trading and how you should go about trading this kind of situation.

What is forex breakout trading?

It is the sudden burst of price movement in a particular direction after a period of consolidation. Forex breakout is usually accompanied by a breach of trend line or trend wall after a period of price moving sideway. The price will then move considerable in the breakout direction and this is when you are going to bank from.

How to profit from forex breakout trading?

Step 1: Setup a Bollinger Band – This can help you check if the market is currently moving sideways or trending. Forex breakout trading works best for consolidating market. When the Bollinger Band is very narrow, then the market is at the stage of consolidation and you should be watching out for the breakout trade to occur.

Step 2: Draw a Trend line or a Trend Wall – What a trend line or trend wall does is to show you the range the price is currently moving and allows you to have a gauge of knowing the direction of the breakout.

Step 3: Watch out for sudden expansion of Bollinger band and breach of trend line – When the Bollinger band suddenly expand after a narrow consolidation and the price also breach the trend line at the same time, you should be entering a trade based on the direction of the breakout to grab your profit.

Here is a picture of a typical forex breakout trade:

These are the three simple steps you can take to profit from forex breakout trading.

I have written another post forex breakout trading made easy part 2 that will teach you how to increase your odd of winning using breakout strategy by minimising something known as fake outs.

You can find out more about other forex strategies here