Forex trading breakout strategy

Forex trading


Another strategy that can be recommended for beginners is a 50-day breakout forex strategy. The same, with only two changes to the rules:

 

After you get the highest or lowest closing for 50 days, you wait another day. If the day is closed in the opposite direction of the breach at the end of that second day, you will have an entry signal to trade. So, you are waiting for the price to "fall" immediately after the breach.

Entry is more difficult here, as the price may still fall against the trend strongly, so it may be a good idea to move to the four-hour or hourly time frame and enter only when you have a candle closing above the closing prices of the previous two candles in a row (if you are looking for a long position), Or less (if you are looking for a short position).

 

Weekly "retreat buying" trading strategy multi-time


Elsewhere I explained several trading strategies based on the trading of the weekly time frame. One of these strategies that might be suitable for novice Forex traders is the "buy dips" Forex strategy. This strategy recommends setting trading opportunities on the weekly timeframe and using the 4-hour or hourly chart to locate the entry signal, which I explained above. The daily chart can also be used here to find the entry signal. The important thing is that the fixed stop loss is always used and is less than the value of the ATR indicator for 15 days at the time of entering the trade.

 

Just like in other trading strategies already outlined, it is important not to risk more than 0.25% of your account value in any single trading. To read more about it check this article: Forex Strategies for Novice Trader 2020

 


Simple range Forex strategy


Most of the time, markets are not trending, and all the strategies I have already outlined in this article are effective only in vector market conditions. While it is true that you will never become a successful and profitable trader unless you learn to trade patiently, it may be good to have another instrument in your trading group for those periods where we do not have trends in the major Forex currency pairs.

 

The first step here is to determine when conditions range. This can be done by verifying that neither the EUR / USD pair nor the USD / JPY pair are achieving new highs or lows for 50 days.

 

The second step is to find a currency pair that has been moving sideways over the past 50 days amid relatively high volatility. The way to find a currency pair has been moving sideways over the past fifty days is to use the daily chart and use the horizontal line tool to draw horizontal lines at the highest and lowest point in the last 50 days of the candles. Alternatively, you can use the Donchian Channel Index for 50 days. If the lines appear to be relatively flat across the screen, you have a currency pair that you can trade smartly with this forex range strategy.

 

You should then set up and apply the ATR indicator against the daily chart. In one, set the time period to 50 days, and in the other, set the time period to 200 days. If the value of ATR for 50 days is at least 1.2 times the value of ATR for 200 days, then this indicates that volatility is relatively high compared to the long term, but we can see that the price lacks direction.

 

You are now ready to wait for the trading signal. Unlike other trading strategies discussed here, you are trading against a breakout, so your trading direction is in the opposite direction. A trading entry signal is given when the daily candle fuse exceeds its lowest or highest level in 50 days, but the candle closes in the other direction and closes perfectly in the other half of its price range. For example, you see that the daily candle contains a fuse whose bottom is lower than the lowest price in the past 50 days, but it is approaching, and the close is good in the upper half of the daily candle range. This gives you a buy entry signal.

 

A good example of a buy entry trading signal appears below in the daily chart which shows the Swiss Franc / Japanese Yen pair. The value of ATR 50 is more than 1.2 times the value of ATR 200, and the horizontal lines at the top and bottom of the graph drawn two days ago show that the last 50 days have experienced sideways movement in general. Notice how the daily candle fuse broke yesterday's 50-day low at 109.21, but then rose strongly from there. This setting could have been used to enter a long position yesterday when the bullish candle closed within the upper half of its price range. The stop loss below the entry bar will be right at 109.17.

 


Forex Chart

 

Trading management is less important in this type of range trading strategy. For exit trading strategy, it is better to use other range limits as a target. For example, if you trade a bearish reversal at the highest level in 50 days, the lowest level in 50 days might be your goal to take profits and exit the trade. Of course, if the price approaches the target and shows clear signs that the momentum is running out or appears to be already reversing against you, it makes sense to exit early.

 

Conclusion


Beginners in Forex can benefit from using the best simple trading strategies that succeed in Forex, because these strategies are relatively easy to follow, and has a proven track record of making a profit in the long run, which increases the odds of profit. Finally, these strategies outlined here are combined with tips to use in learning how to become a better Forex trader, by comparing signals and trading results with what you feel at the time, to see if you have started developing the skills that will allow you to trade more profitably than Algorithm.

 

common questions


What is the best Forex trading strategy?

The best Forex strategy is any relatively simple strategy that takes advantage of the technical advantage to follow the long-term trend in major Forex pairs, by using relatively narrow stop-loss orders and allowing profitable trades to operate.

 

How do I start a Forex strategy?

You can find a published Forex strategy like the one outlined in this article, or you can use the principles on which you are built to design a similar strategy that best suits you, and that can also work.

 

What is the easiest Forex pair to trade?

The easiest Forex currency pairs to trade are EUR / USD and USD / JPY because they are the cheapest to trade in terms of low spreads due to high liquidity, which is also currency pairs that tend to move towards more reliably in recent years.


0
facebook icon
Add comment

Add comment

reload, if the code cannot be seen