Profitable Forex Breakout Strategy

Breakout trading can be highly profitable yet at the same time frustrating as many breakouts have a tendency to fail. The main cause behind most of these false breakouts in the forex market is the big players that intentionally cause pairs to breakout in order to suck in non suspecting or inexperienced players.

The trick in breakout trading lies in filtering out the false breakout from a true breakout. If you can somehow master how to filter a false breakout from a true breakout, you can avoid burning your fingers by trading these false breakouts. What you need is to develop a false breakout filtering system that can help you screen out a false breakout from a true breakout.

In this false breakout filtering strategy we will take advantage of a strong trend in the market that is making higher highs or lower lows. We will look for such a strong trend that suddenly makes a low or a high, then reverses and starts making new highs or lows whatever the case maybe.

If you can find such a trade setup, it has a very high probability of success inherent in it. The reason is simple. Most of the inexperienced players tried to trade the false breakout, got their fingers burnt and were stopped out when the trend again made a u-turn. This leaves only the strong real money big players in the market who reenter the market again in the direction of the trend and push it higher or lower as the case maybe.

How to identify such a high probability trade setup? Look for a currency pair making a 20 day high. Look for it to make a 2 day low in the next 3 days. If it does make a 2 day low in the next 3 days, look for it to trade above the 20 day high in the next 3 days after making the 2 day low. If it does, enter into a long trade by placing a stop loss a few pips below the 2 day low and protect your profits by using a trailing stop.

Similarly, suppose you find a currency pair making a 20 day low. Look for that pair to make a 2 day high in the next three days. Once, it makes a 2 day high, look for it to trade below the 20 day low in the next three days. If it does, enter into a short trade by placing the stop loss a few pips above the 2 day high. Use a trailing stop to make as much profit as possible. Good Luck!

Mr. Ahmad Hassam has done Masters from Harvard University. Get these Forex Scalping Cheatsheets plus the 10X Scalping System FREE. Download this award winning Forex Trading System that made 1,306.50% in one month FREE and watch the banned system video.

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