Simple Breakout Forex Trading Strategy

This Is A Simple Breakout Forex Trading Strategy based on the GBPUSD forex pair.

This breakout strategy is designed to capture an early move of price when it is starting to establish its trend or market direction for the day.

TIMEFRAMES

Here’s what you need to do about trading timeframes:

• The Frakfurt Market Opens at 2:00 AM Eastern Standard Time (if 7:AM Gross Median Time)
• Then the London Market (the giant forex mover) opens an Hour later (8AM GMT).

This is the European forex session and forex market starts its day in Europe first.

CURRENCY PAIR

Ideally, you’d want to trade only the GBPUSD pair in this one as this tends to have more volume when the London session opens.

Others may include EURGBP or any pairs that has a GBP in it.

FOREX INDICATORS

You don’t need any forex indicators for this breakout system.

HOW TO TRADE SIMPLE FOREX BREAKOUT TRADING STRATEGY

Here’s how you trade this forex breakout trading strategy:

1. Start with 1hr timeframe
2. You need to find out the “price range” from 1:00 EST to 2:PM EST (This is the 1hr candlestick you should be looking for)
3. Look for the highest high (peak) and the lowest low (bottom) of the price in that range.
4. Then Draw parallel horizontal lines through those  two price extremes-this will create a tunnel.
5. Now switch to a 5minute chart and wait and watch to see if a 5min candlestick closes outside of the tunnel.
6. If it closes above the highest high, you initiate a buy order
7. If it closes below the lowest low, you initiate a a sell order.
8. Buy order can be at market order or buy stop order. A sell order can be a market order or sell stop order.
9. Place your stop loss at least 5 pips outside the tunnel (should not be exactly on the tunnel lines).

This chart below is the 1hr forex chart where you begin your trading analysis following the steps given above:

This 5 minute chart below is where you wait patiently to see any 5 minute candlestick breaks out of the tunnel and and if it closes above/below it, that’s when you enter a trade.

Pretty simple forex breakout trading strategy really. You just have to have the ability to use multi-time frame analysis and you’d be fine.

TAKE PROFIT TARGETS:

As usual, I would give you a couple of options:

• 3 times what you risked.
• if buy trade, set your Take Profit targets within the previous swing high (peak) or if sell then use a previous swing low point (bottom).

TRADE MANAGEMENT.

• move initial stop loss to break even when market moves by the amount risked and continue to trail stop it behind each new low peaks that form (for sell order) and higher bottoms that form (for buy order)

So there you have it…a simple forex breakout trading strategy. It’s pretty easy, isn’t it?

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