Red Hot Tips Point: Forex Trading Strategy - The Method the Pro Traders Use to Make Huge Profits

Sunday, October 11, 2009

The Forex trading strategy enclosed is popular with many of the top traders in the world and it's very easy to understand and do yet, almost new traders in Forex use it but that shouldn't worry you to much 95% of them lose money! Let's look at how this simple logical strategy can make you some great Forex Profits.

Lets first look at how all Forex trends start and if you look at a chart of any currency pair a bull trend will start by breaking up to a new chart high, as the trend matures and develops the bullish currency will keeping breaking highs and this can go on for weeks, months or even years. If you want to get in on these trends when the risk reward is at it's best, you need to buy these breaks of resistance.

Before we look at how to spot a good breakout, lets look at why novice traders fail to use this method.

The problem most novice traders have is their mindset, they want to buy the exact turn in the currency and this means, their constantly buying into support and hoping it holds. A lot of traders call this prediction but as you can't predict Forex price movement, it's just hoping or guessing, these traders keep getting stopped out and their equity gets burned.

It's not that these traders don't see a breakout as bullish many do but their attitude is - the price has gone to far, I will wait for it to come back but on the best breakouts it never does and they miss the trend and a good profit.

If you want to win at Forex trading you need to look at breakouts and when they occur - just get on board, keep in mind the odds of success are at there highest when a breakout happens and always keep in mind, that a trend in motion is more likely to continue than reverse.

Good breakouts are levels which have had a few tests before the break,in pure technical terms the minimum number is 2 - but you need more to get the odds firmly on your side. The more times the level is tested, the better the breakout will be when it comes. I look for at least 4 tests and like to see the tests, have occurred in time periods of at least a few weeks apart. Another trick to confirm the breakout, is to use levels which line up on the longer term weekly chart as well as the daily.

When the break comes, protection is under the level which has just given way - if your wrong your out with a small loss, giving you good risk to reward.

There is nothing complicated about breakout trading, it's easy to learn and furthermore, as markets will always trend, this method will always work. If you want to win with a timeless Forex trading strategy, trading breakouts can make you a great second income in around 30 minutes a day.