Breakout Method is One of the Simplest Forex Systems
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Simple Forex System - Breakout Trading System
What is the breakout method and how to trade it
First let's define what the breakout method is. Whenever you define a price range and the price breaks out of that range you have a trading opportunity. The range can be defined in different ways. Usually it's a period of time where price did not move a lot. It can be the period of Asian session. Sometimes an indicator can be used to identify such a ranging period. I use Bollinger bands to identify the squeeze in price range.It's very simple to trade the breakout method. First you need to set a pending order to buy at the top of the range. Then you set the pending order to sell at the bottom of the range. Or if you can continuously watch the charts then you buy or sell as soon as price breaks out the range. Some people introduce more sophisticated rules into break out method. Fore example they can wait until candle closes outside of the range. The beauty of the break out method you know for sure where to place your stop-loss level.
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Simple Forex System - Breakout Based on Bollinger Bands
This is one of my favorite trading setups. Place Bollinger indicator on your 15-minute chart. Look for the period when bands become horizontal and the distance between them becomes no more than 10-15 pips. The longer the squeeze lasts the higher the probability of a profitable breakout trade.Now place your orders on each side of the bands. The upper band is where you place your buy order, the lower band where you place your sell order. Stop-loss levels are placed at the opposite bands. With EURUSD pair this method gives at least 30 pips. But taking profit is actually art of trading. So you need to test your profit taking levels and methods with it.
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Simple Foex System - Breakout System Example
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