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…