In this post, I am going to share a Forex Trading Strategy which takes advantage of these 2 important elements happening in the market :
1) An ” Extreme BREAKOUT ” In Price
2) And then riding on the TREND with multiple - ” Price Pull-Back Entries “
As an aspiring trader ( or so called newbie ) begins his / her Forex exploration journey…
He / She would bound to bum into this Forex Price Breakout at certain point of their learning process.
….Regardless of from what source they learn their trading from….
99% of the time….these aspiring newbies would ( for sure ) heard about this Forex BREAKOUT at least once or twice…
Well….the reason is pretty obvious here…… isn’t it..
A Price Breakout is certainly Very Profitable……
…Especially when a BREAKOUT would lead to an ” Explosive ” movements in the forex market..
When that happens…..It also means there are lots of valuable PIPS ( Profits ) for any traders in the ” KNOW ” to grab..
In fact, trading Breakout is one of my ” all time ” favorite trading strategy as well.
I don’t need any complicated technical indicators…..
OR…. spent too much time on analyzing the Forex market..
But still………it enables me to nail a ” Relative HUGE “ amount of Pips ( Profits ) out of such EXPLOSIVE movements from the Price BREAKOUT..
Truly cool I must say ….* smile *
Recently, I have been receiving many emails from fellow readers ( whom came from all over the world ) asking on how to trade a Price Breakout …
And most of them actually ” sort of already know ” …… how to ( roughly ) trade such Breakout in the Forex market..
BUT the thing is that they are still NOT confident of spotting for a ” reliable Breakout ” set-up to trade.
By ” reliable Breakout “……….I mean one that would lead to a short term prevailing trend in the forex market after the price exploded.
Well….
When You DON”T KNOW how to filter the more ” reliable & profitable ” set-ups to trade..
The end of the day results would most likely be Utter Disappointments..
Although Your trades might be protected by a Stop-Loss…
But if You are LOSING 5 times..
…Winning another 5 times…
Then that is basically back to ” Square-One “ ……..Hmmmmm….
Meaning only seeing a ” Break-Even ” account size end of the day.
( or slightly in the deficit zone due to the losses from Spread incurred )
So to help You guys understand more on how to take advantage of the Lucrative Price BREAKOUT in the Forex Market…
….and spot for ” Low Risk ,HIGH Rewards & Very Profitable “ Set-ups prevailing in the trend that follows after the BREAKOUT..
I shall share a Proven & Time-Tested Forex Trading Strategy to capture such Breakout below.
The beauty of this Breakout Strategy is that once spotted..
You will normally get at least 2 - 3 ” Very High Probability & Profitable Entries “ to grab some nice Pips out of the market… ( again and again )
Alright…let’s get started now :
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Profitable Forex BREAKOUT Trading Strategy That Takes Advantage of Multiple ” Low Risk….HIGH REWARDS “ Price Pull-Back !!
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The reason why I have been a strong believer of trading with Price Actions in the forex market is because they are NOT LAGGING, More Reliable & Much Accurate.
Perhaps You already know this fact by now too…..
IF….. You have been reading my forex tips so far… * smile *
That is why I DO NOT need any fundamental or so called ” Insider Tips ” to help with my analysis..
But rather…..
…Based purely on the Price Actions in the market, I can predict where the Price is going to head to next…( and most of the time with High Accuracy !)
Combining with a good Risk/Reward ” Entry ” point…..
…..it literally enables me to secure Very high trading success ….each and every month. ( for 5 years+ now)
Read on below for more details on why I said You don’t really need any Fundamental or INsider Tips …..
…..BUT just Price Actions to spot such highly Profitable BreakOut to trade !
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If You have been trading for awhile….. or…. at have been reading up quite abit on forex trading..
Then it is not new for You to know that a ” Double Top or TRIPLE Top “… is actually a Bearish Sentiment in the market…
That’s because such Tops are direct reflections of the ” Resistance Levels ” in the market…
Meaning the buyers are NOT willing to settle for a higher price anymore..
Thus , such TOPs ( Resistance Levels ) are being formed in the market.
HOWEVER….
IF these resistances are being BROKEN - And Price BREAKOUT To The Upside…
It could mean another story then…
And most of the time, a NEW TREND would prevail after such BREAKOUT
But what do I mean by TOPS ( Resistance Levels ) being broken then ?
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Here’s Some Illustrations To Share :
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( This is traded on the EURUSD currency pair - 4 hourly chart )
Initially there are 3 ” Tops ” spotted in the market ….
Such resistances are indeed very STRONG…since it failed to be broken on 3 occasions..
As can be seen below, the price is at the resistance level once again to test it..
And based on the ” Full Bull Candle ” present…..there’s a possibility that it could be broken anytime soon.
So what I would do is monitor closely and wait for it to be broken.
….And indeed…in less than a day time, the Price has BREAKOUT to the upside….
Forming a ” New High “.
Here’s an illustration to show :
As can be seen above…the price has finally BREAKOUT to the upside now..
Taking out the previous resistance points..
Like I mentioned earlier ….this is the chart of EURUSD on a 4 Hourly Time-Frame..
Any ” Breakout ” on relative big time-frame such as the 4 hourly…..
It could result in a short-term trend that last for 2 -3 days…or MORE !
…..BUT !!!!
…..You definitely should NOT simply just jump into the market and start BUYing/ LONG at whatever price point You want though…….
Considering the Risk/Rewards involve…..is very critical for Your success here.
And You preferably ONLY want to capture those ” Low Risk & HIGH Rewards ” set-ups..
If that’s the case, then what should You do in order to capture the ” Low Risk/ High Rewards ” set-ups ?
Any idea on Your side before I reveal mine ?
( ….Give You 2 minutes starting now then….* smile * )
Well…for those that like the challenges of coming up with an answer for Yourself..
Carry on please..
But for those that do not want to …..
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Proceed to read on my complete step-by-step explanations below :
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What You need to do is rather simple actually…
Since You spotted such ” Triple Tops Breakout ‘ on a 4 Hourly Time-Frame..
So in order to look for ” Low Risk & HIGH Rewards ” set-ups to ride the Up-Trend that follows..
Just drop down to a ” Lower-Time- Frame “…..
And for this case, the 1 Hourly would be good !
Why so ?
Because whenever there is such ” BREAKOUT ” spotted on a bigger time-frame…
There would bound to have at least 2 -3 good ” Low Risk & High Rewards ” entry points on the lower time frame…
But before I get into that..
Let me show You what kind of Profits Potential we can expect from such a Triple Tops BREAKOUT on the 4 Hourly Time Frame first …
( Assessing this step is very important as You would be able to know the maximum amount of Pips You can grab….while track on the ” Realistic ” side !! )
From the illustration above..
It is clearly seen that the profit potential ( amount of pips that can be grabbed )…..is about 320 Pips !!
And that is from the point of BREAKOUT to the next immediate Resistance Level on the 4 hourly time-frame.
Yes……..You can definitely SWING this trade and ride the entire trend for all potential pips..
But on the other hand…..
I know that NOT many traders can withstand the many ” ups & downs ” that are bound to occur ….
…..while waiting for the price to climb for more than 300 pips..
Most important, most traders ( especially those just starting out ) simply CANNOT stop worrying about their positions…..( while having to hold overnight or for days….)
As such, that could mean they are better off NOT sleeping the entire night…
( bad for health……really bad for health….right ! )
So in order to benefit the newbies as well..
I decide to share this Breakout Strategy such that anyone can also spot for ” Profitable & Low Risk Entry Points “ on an INTRA-Day basis.
….and just play the short term momentum in the market.
In order to achieve that…..
…We will be looking for good entry points in the market by targeting on the multiple Price -Pullbacks that would happen.
Read on below as I share with You on :
1) My ” very 1st- Entry ” point & Take-Profit Level
2) My ” 2nd -Entry ” Point….& Take - Profit Level
3) My ” 3rd - Entry ” Point….& Take - Profit Level
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My Very 1st - Entry Point For BUY….& Take - Profit Level
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Again…this is the Price BREAKOUT Point on the 4 Hourly Time-Frame ….( to help You recall again )
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….And by dropping down to the 1 hourly time-frame….
This is how I look for the ” Low Risk & HIGH Rewards ” Entry Point :
Using the proven theory of ” Previous Resistance Turns Support “ ….during an uptrend..
I choose to BUY shortly after the price has bounce off the previous resistance level and about to climb up. …( as illustrated above )
My BUY at Price : 1.34554
My Stop-Loss at Price : 1.34154 ( 40 pips risk )
My Take-Profit at Price : 1.35354 ( 80 pips rewards )
As this is a BREAKOUT on a bigger time frame, it is definitely feasible to aim for rewards that are 2x my risk…
However….as I am using a ” relatively TIGHT ” Stop - Loss here..
So there’s one thing I have to do in order to protect my trade though…
That is essential to avoid seeing a Winning Trade turning into a LOSING one.
What needs to be done then ?
That is …..when the price has climbed for 40 pips….( which is my stop - loss amount)
I will at least SHIFT My Stop-Loss to BREAK-EVEN point..
As well as exit 50% of my lots to keep some of the profits first..
Very mandatory to do this step of ” locking in profits ” especially when the Stop-Loss I am using is Relatively Tight..
So how did this trade progress for me ?
Here’s the illustrations to share :
As You can also see above…
Shortly after my BUY entry at price 1.34554..
The price actually started to climb for about 30 pips and then DIP down again..
This time ” nearly hitting ” my Stop Loss placement…. ( but missed by 3 pips !! )
After that it climbed all the way to my first 40 Pips Profit - Target…
It is also at that moment where I EXIT 50% of my total trading lots ….
I entered with 6 Standard lots so……it is equal to : ( 6 Lots x 50% = 3 Lots )
However…the price did not hit my 80 Pips target but rather….
……it PLUNGED down again and this time…… even LOWER than the previous one.
Which eventually taking out my trade and hitting my Stop - Loss level…..BUT at ” Break-Even ” point.
With the first 50% Partial Exit on the first 40 Pips….I am still a winner for this trade though. * smile *
Imagine if I did NOT implement the ” Partial Exit ” strategy……
…..NOR the ” Shifting To Break-Even Point ” for Stop Loss..
What would be the end results eventually ?
I would be LOSING this trade entirely right…..?
Losing => 40 Pips x 6 Standard Lots that is !
Hmmm……..definitely no good.
So now You know why am I ( very ) particular with ” Protecting ” my previous profits….
Especially with an intra-day position where the ” entry, stop-loss & take-profit ” are so CAREFULLY planned….
BUT I still DON’T give chance for ERROR - Should the trade reverse halfway unexpectedly….
Very important to take into consideration about ” Protecting Your Previous Profits “…..indeed.
Please do so IF… You are NOT doing so …ya.
Alright….with this, I shall end the step-by-step explanations for the ” 1st Entry & Take Profit ” point for this strategy…
I will be sharing on the ” 2nd & 3rd Re-Entry ” later below…
And they are getting more ” Exciting ” though……..* smile *
Continue reading below to learn other details on this Highly Profitable ” Breakout ” Forex Strategy ….is a must ! * smile *
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Before that, here’s the earnings screen-shot with my ” entry, stop-loss & take-profit ” to share :
( 1st Exit - 40 Pips with $1,200 profits )
( 2nd Exit - at Break-Even )
My 2nd Re-Entry Strategy - By Taking Advantage of The Next Price Pull-Back….
When there is a high tendency for a Strong Trend to develop in the forex market….
….Especially after a Price BREAKOUT on the higher time-frame..
There bound to have MANY “ Low Risk & HIGH Rewards ” Set-Ups for You to enter….re-enter…..and re-enter….
….again and again to grab some good amount of PIPS ( Profits ) for Yourself.
And this is exactly what I am going to share with You next ..
In order to make sure that the it is a ” Healthy & Profitable “ Up-Trend still…
We need to see 2 ( Important ) things happening in the market namely :
1) The Price Has To Make A ” Newer High “…
2) The Price Has To Pull-Back / Retrace To Previous Resistance
If these 2 ” essential elements ” are being spotted in the market..
Then it could be considered a ” Low Risk & HIGH Rewards “ Set-up You can take advantage of for Re-Entry.
Like This :
Upon seeing the price bounce off the previous resistance..
And also spotted a ” Bullish Candle ” closed….
That is a good sign of an ” Re-Entry ” for a BUY.
After weighing the Risk ( Stop- Loss ) needed….
…And confirming that using a tight stop-loss of just 40 pips is feasible…
I then go ahead and ” Re-Enter ” to BUY again.
Here’s an illustrations again to help You see better :
For this 2nd Re-Entry…
I am still sticking to a tight Stop-Loss of 40 Pips too.
And aiming for a Take-Profit ( TP ) Of 80 Pips.
That would give me a good rewards/risk ratio of 2x.
The ” Average Daily Range ” for this currency pair that I am trading ( EURUSD ) is about 120 - 150 pips..
So aiming to grab 80 pips out of the range is definitely being ” realistic “ here.
This is especially when there are so many ” good confluence “ of Price Actions being present here….( as mentioned above just now )
So How Did This 2nd Re-Entry Turns Out For Me ?
Here’s the results to show :
As I am using the 50% partial exit strategy for the first 40 pips..
That happened about 2 hours of my entry actually…..( as You can see above )
At the same time I also shifted my Stop-Loss to the Break-Even Point now…( at Price 1.35308 )
This is to ensure that even if the trade was to turn against me now….
I have already pocketed the 40 Pips earlier….
Since my SL is at Break-even now….I would NOT Lose Anymore !
This is literally a ” nice feeling ” knowing that the only outcome WINNING end of the day..
Agree ? * smile *
After trading for a few hours more..
This price finally hit my Take-Profit point at Price 1.36108…. ( for 80 Pips Rewards )
And that is for the 2nd 50% of the total lots I enter to trade initially.
A nice 2nd Re-entry here isn’t it ….?
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Here’s the earnings proof with the exact ” Entry, Stop-Loss & Take-Profit ” to share :
( 1st Exit - 40 Pips with $1,200 profits )
( 2nd Exit - 80 Pips with $2,400 profits )
Next…..
I am sharing on the 3rd Re-Entry strategy - While still continue ride on the ” Juicy Profitable ” trend prevailing in the market now..
However…this time round I am doing something ” slightly ” different though..
But it is definitely a good thing for our Pocket ( and trading account ) end of the day ! * smile *
Read on to find out the exact details.
Once again….
…..since I am still riding on the prevailing short-term trend after a Price-BREAKOUT on the bigger time-frame..
I need to make sure that the elements that needed to confirm that the trend is still a ” Healthy & Profitable ” one still present too.
These Essential Elements are namely :
1) The Price Has To Make A ” Newer High “…
2) The Price Has To Pull-Back / Retrace To Previous Resistance
If these 2 ” essential elements ” are ( again ) being spotted in the market..
Then it could be considered a ” Low Risk & HIGH Rewards ” Set-up You can take advantage of for Re-Entry ( again ).
Like This :
For this 3rd Re-Entry I am executing…
I am actually doing something ” slightly different “….which is beneficial to my Pocket. ( as I mentioned earlier )
That is….I am aiming for a ” Slightly Bigger ” Take - Profit Target this time round.
And what’s the reason for my decision to aim for a slightly bigger Profit target then ?
If You notice from the illustration above.
The ” Pull-Back/ Retracement ” is actually MORE than the previous one ..
In a trending market….the MORE the ” Pull-Back / Retracement ” is…
That would also implies that one can aim for MORE Profits too..
( normally 1.5 - 2 times the ” depth ” of the Pull-Back/ Retracement )
So instead of aiming for 80 Pips Rewards like the 2 previous trades..
I am aiming for 100 Pips this time round for the TP.
While still maintaining my Risk ( Stop-Loss ) at merely 40 pips.
This would enable me to achieve an even better Reward/Risk ratio of about 2.5x.
Here’s an illustrations of my Entry, Stop-Loss & TP to share :
And how did this 3rd Re-Entry turns out ?
Did I manage to profit the FULL 100 Pips I wanted..?
Here’s the results :
Indeed….the price Charged-Up continuously to my 100 Pips TP point without retracement..
( You can see from above too ! )
As I am executing 50% partial exit..
The exit for the first 40 Pips was done after 1.5 hrs from my entry to BUY…
And the 2nd partial exit for the FULL 100 pips was triggered after about 3 hours of trading.
Here’s the earnings screen-shots for the exact ” Entry, Stop-Loss & Take-Profit ” to share :
( 1st Exit - 40 Pips with $1,200 profits )
( 2nd Exit - 100 Pips with $3,000 profits )
All in all…..how many times have I entered into the market till now ?
The ( very ) 1st Entry….
…..Then 2nd Re-Entry..
…And subsequently 3rd Re-Entry…
So altogether 3 times in total !
Most importantly….ALL are winning trades….
( though 1st one only profited 40 pips at 50% partial exit )
But just as the Warren Buffet said so …..
“…As long as You are not Losing….You’re a Winner ! “
That’s definitely very true in any trading game.
Even when You are equipped with a set of SOLID & Proven trading strategies…
But it does not include any strategy to ” Protect Your Trades - Especially The Earlier Profits “…
Then I would say that the Winning Probability is NOT being Optimized Or Max Out Yet…
Most traders are losing money in the market because they are NOT taking the extra step to secure their profits actually.
( Am sure You would rather ” Profit 5 Pips……then to lose 20 PIps right ! “…)
So what they experience most of the time is to see their Profits being given back to the market……
OR….a Winning trade ( previously ) turning into a LOSING one now……..
That is definitely very frustrated…..very disappointing to experience in trading.
So if You are one such person whom is NOT using a method to ” secure your previous profits “…
Or maybe …..You just DO NOT know how..
What can You do then ?
You can go on and explore a few such methods and then choose the one You prefer…
Or ….You definitely can follow the ” Partial Exit ” strategy that I used for my explanations above.
For a currency pair with Average Daily Range of about 120 - 150 pips…
I am personally getting very good results with a 40 Pips Stop-Loss…
As well as 80 Pips Rewards…
And I will exit partial lots at the first 40 Pips ….
Then shift to break-even for the remaining lots to allow the trade to proceeed to the full TP point.
That’s about it.
If You’re NOT feeling confident about such exit strategy now…
Do not worry…
Just keep on practicing…..and soon You will begin to get a ” better feel ” of using such exit strategy..
BUT there’s one important thing though…..
40 Pips can be considered a ” Rather Tight Stop-Loss ” to most..
And for those traders whom are NOT good at recognising ” Reliable Pull-Back/ Retracement ” yet…
This kind of ” tight ” Stop-Loss could pose some frustating problems ….again and again….
YES…….I mean getting those ” Tight Stop Loss ” hit…and hit again…
So if You’re one such trader….
It is perfectly fine though….
Just use a ” slightly bigger ” Stop Loss will do….
Perhaps in range of 50 - 60 Pips is still fine….
Because You would be aiming for 80 pips rewards..
As long as Your strategy is at least 60% winning rate…
You will end up wining end of the month….* smile *
So to summarize the Forex Breakout Strategy I shared today….
Just allow me to emphasize a few important points about this BREAKOUT strategy before I pen off …
Summary For This Entire Forex Breakout Strategy - While Taking Advantage Of Multiple Price Pull-Backs
( NOTE : All the steps below that I am summarizing for You have been explained in the entire strategy above just now. So if at any point You cannot recall what am I talking about, do feel free to scroll up and refer again to the illustrations ya. This is essential for understanding, absorbing and ultimately mastering a new proven forex strategy …..right !! )
- Make sure that this BREAKOUT is happening on the bigger time-frames such as the 4 hourly or daily…( as they are more reliable & more Potential PIPS to be grabbed )
2) Upon spotting one such ” BREAKOUT “…….measure the Profits Potential You can expect out of this move. You can do so by measuring the Pips difference from the ” Point Of Breakout ” to the next ” Resistance Level ” on the 4 hourly Time Frame.
3) Once confirming the ” Potential Profits That Could Be Grabbed “……drop the to the next LOWER Time-Frame to spot for Price Pull-Backs/ Retracement
- This is because ONLY with a Price Pull-Backs / Retracement then it is possible to achieve the ” LOW RISK & HIGH REWARDS ” Potential….
4) Once Spotted a ” Price Pull-Back / Retracement ” in the lower time - frame….do make sure the price has actually fall to the PREVIOUS RESISTANCE LEVEL before You enter to BUY. ( for an uptrend )
5) To increase Your winning probability, consider using the ” Partial Exit ” Strategy even for intra-day short term positions.
6) For Re-Entry , do make sure that the Trend is STILL ” Healthy & Profitable ” by confirming with 2 Important elements namely :
i) The Price Has To Formed A ” New High ” Than The Previous High
ii) The Price Has To Pull-Back / Retrace To The Previous Resistance….( for an up-trend )
7) When I am personally trading this strategy, I will at most settle for a 3rd Re-entry and nothing further. That is my personal preference.
But if You would like to go for the 4th Re-Entry ( because after going through the checklist,
the trend is still healthy and good )……
……then so make sure that there is still an ALLOWANCE of At Least 150 Pips before hitting the Resistance Point You pin-point in the 4 hourly earlier.
Let’s say You’re also like me……aiming for 80 Pips out of the potential 150 Pips to go is definitely ” Realistic ” here….agree ?
Yeah….so do make sure You have at least 150 Pips allowance to the PEAK You pin-point while calculating the Potential Profits .
Once You have won the ( valuable ) Pips You wanted frm the 4th Re-Entry…..
…and soon after that You actually saw a ” Double Top, Head & Shoulders ….or Perhaps a Evening Start Formation ” on the 1 hourly time frame….
These are basically a ” BEARISH Reversal Formation”…..SO….it is best for You to step aside for now and do not re-entry again….
By then….You should have WON 3 - 4 trades and grabbing 200 - 300 pips out of this trend already..
So definitely DON”T NEED to be ” Greedy ” temporarily ….right ! * smile *
Alright…so much for this ” Profitable & Highly Effective Forex BREAKOUT Strategy “…
I shall pen off now..
Thanks for reading this far..
Hope You can now include another proven & extremely effectively BREAKOUT strategy to Your strategies arsenal too …..( and ace the market with confident ! )
