Here we are going to look at a forex trading strategy that works, will continue to work and which you can learn in a couple of weeks and implement in about 30 minutes a day…

The forex trading strategy we are going to look at is a long term trend following system based on breakouts.

Most traders make the mistake of thinking they can buy low and sell high and predict market turning points in advance but this is rubbish.

Predicting is hoping and guessing and there is no way of doing it, so don’t try.

The best way to trade is not to hope or guess but to act on the reality of price change. This is why anyone should make breakouts part of their forex education.

A fact of Forex Trading

It’s a fact most trends start and continue from new market highs and lows and the big trends last for weeks, months or years and if your forex trading strategy is based on breakouts, you can catch huge chunks of these major trends and make big profits.

Look at any forex chart and you will see how much profit can be made from breakouts.

Valid Breakouts

Breakouts are the way to trade but you have to be selective.

Generally the more times a level has been tested, before it breaks the more the odds are on your side also, the more time frames and the wider they are spaced apart, the better the breakout is likely to be.

You are looking levels which the market considers important. If the majority think prices shouldn’t break out and the more uncomfortable the trade feels, the bigger the trend is likely to be remember, the bulk of traders lose!

Why the Majority don’t do it!

Most traders can’t buy breakouts, as they want to get in at a better price and wait but they wait in vain. The big breaks move quickly and they watch the trade sail over the horizon and never get in.

This is why breakout trading is so effective.

The big breaks don’t come around often, so you need to wait for them and to give you an example of how profitable they are, I know traders who trade just a few times a year but make triple digit annual gains.

Don’t be fooled by the thought of the more you trade the more you can make – this is simply not true.

Getting the Odds on Your Side

To get the odds even more on your side, when the breakout starts, price momentum should be on the rise and here you need to learn about momentum oscillators.

We have discussed these in our articles but a good two to look at are – the RSI and stochastic. These are visual indicators and you learn all about them and how to use them, in around an hour.

If they support your view, go with the break and put your stop under the breakout point.

Milking the Trend

Most traders never catch big trends because they want to move their stops too quickly to lock in profits. You must avoid this temptation.

Keep your stop well back until the trend is in motion. Trail your stop up slowly and outside of normal volatility, so you don’t get bumped out of the trend to soon.

Keep in mind valid breakouts, can last for many weeks or months and the aim of your forex trading strategy is to get a good chuck of the trend and the profit which means giving the market room to breathe.

Simple and Effective

You can put together a breakout system in around a week.

Make sure you keep it simple as simple forex trading strategies work best, as they are robust. As you are trading long term price trends you only need to watch the market once or twice a day and this should take you around 30 minutes at the most.

Breakout trading systems work and will always work, as long as there are trends.

Most traders try to work hard and predict – when they could just trade the reality and win. Sure a breakout forex trading strategy is simple but it’s very effective, very profitable and to make money, is the aim of any serious trader.

Take a look at trading long term breakouts in more detail and you maybe glad you did.

Source by Samuel Leslie Berkovits