Breakout Trading

Tue Aug 27, 2019 12:51 am
avatar  Forex

In breakout trading, you take a position in a particular trend as early as possible. A breakout or breakout occurs when the price "breaks out" of a consolidation or trading range. It typically occurs when reaching or exceeding support or resistance points.

Trading breakouts are an important strategy, especially in the Forex area, because the fluctuations indicate the beginning of a volatile phase. Traders wait until an important brand has been reached. Then they enter the market right where the "breakout" occurs and stay in the market until volatility fades again.

Normally, such outbreaks occur on historical support and resistance marks. Depending on how strong or weak the market is, this can change as well. Your stop-loss should be set at the point where the market broke out.

The breakout trading strategy is based on the fact that the trading volume of the trades traded in the market are known. However, there is no way to capture the full trading volume in the Forex market, as this is a decentralized market. That's why it's all the more important to use an effective risk management strategy.


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