Category Archives: Forex Trading Strategies

Chart Breakouts – Forex Trading Strategies

Trading breakouts is one of the most popular Forex trading strategies out there, the reason is simple. Breakouts trading offers the most comprehensive and often-repeated opportunities, however, nothing is perfect, you have to be careful not to get tricked and trade in the wrong direction. For that you have to ALWAYS appoint a Stop Loss point.

Anyway, here is how you trade chart breakouts

Note that this example is traded on a bullish breakout, you can certainly apply the same trading strategy on bearish breakouts as well.

As usual, check your trend bias. To apply this trading strategy you should find a good ranging market, or a market that is not having too much bias for neither bulls nor bears.

Locate the previous highest point where the market has reached lately, notice that in this example (in the pictures below, the market was hesitant forming long candlewicks about 100 candles earlier or so. This same level has been visited once before too, that’s why I am taking it in account.

Notice that the price is supposed to respect the resistance area, but you will find later on that it didn’t.

Forex Trading Breakouts Strategies

In this case we wait and see what happens, if price falls again and goes through the same ranging market circle, we would just wait for another chance of a breakout, and while we are waiting we can still trade the range bound market and place all our trades in the direction of the trend (the trend we had before the ranging market occurred).

It did not fall, it did go straight up and made a small breakout, however we won’t count on this, we will just wait further and see how the next candle will be looking like.

Forex Breakouts

The candle close above the resistance level which is a good sign, some traders would enter now, however more conservative traders like myself need to see one more blue candle to form and close above the resistance.

forex breakout pullbacks

Now that we have a confirmation with a wonderful blue candlestick, we can now enter our trade and expect the price to go further with the same bullish bias.

Notice that you should usually place your stop a couple of pips below the resistance level. If you prefer to place your stop somewhere else go ahead and do it, but in all cases please DO place a stop.

Forex Trading Breakout Strategy

As you see, the price has gone up for over 500 pips, far more than what I ever thought.

how to trade forex breakouts

Remember that you don’t have to do this with a bullish breakout, you can trade breakouts both ways.

Always enter the trade when you are 100% sure of what you are doing, there are tons of currencies out there in Forex world, you do not have to trade a particular pair if the market is not clear. And it is a very good idea to always wait for price back testing to make sure you are doing the right thing.


Trading Multiple Time Frames

How to trade multiple time frames in ForexThough the longer framer provide better and more accurate trading opportunities and also applies best the various technical analysis techniques and tools, there are still more trading opportunities on shorter frames, though on these frames the chances are not much solid, they still provide more trading spots than the shorter ones.

To trade shorter frames, you have to take long frames in consideration. The reason to look into larger frames is to have better understanding of the market bias.

In order to trade this way, follow the following steps:

1: Choose the frame you want to trade on, depending on what kind of trader you are and how much time and money you are willing to invest. Trading shorter frames requires less time and money, while trading longer frames can take hours or even days of regular observance.

2: After choosing the time frame you want to trade on, go to a bigger frame to locate the trend, seeing if it is an uptrend, a downtrend or a range bound market.

When you choose a bigger frame, keep it mind to use 1:4 to 1:6 ratio. For example, you want to trade on one minute chart, you have to locate the trend on a 5 minute chart.

Check this table of charts and how to recognize the trend bias on them. To trade on one of the charts on the left, you have to locate the trend on the right side of the table.

 You want to trade in…

You have to look for the trend in…

 1 Minute Chart

5 Minutes Chart

5 Minutes Chart

30 Minutes Chart

15 Minutes Chart

Hourly Chart

Hourly Chart

4 Hours Chart

4 Hours Chart

Daily Chart

Daily Chart

Weekly Chart

Weekly Chart

Monthly Chart

3: If the market on the proper longer frame is an uptrend, then we should be looking only for buying opportunities on our short-frame chart.

If the market on the proper longer frame is a downtrend, we should be looking only for selling opportunities on our short-frame chart.

  • A “long” chart is often mentioned here meaning a chart of a long time frame. So is a “short” chart here means a chart of a short time frame.
  • The longer chart is, the more reliable it is and the more accurate information it provides. The reason is the number of trades each candle represents.
  • Longer frame charts offer the solid trading opportunities, while shorter frame charts offer more trading opportunities. You can say:
    Long Charts = Quality
    Short Charts = Quantity
  • You can draw Fibonacci or trends on a long frame, and still use it on a shorter frame.
  • Whenever you are looking for the trend bias, whether it is bearish or bullish, it is advised that you look at the last 100 candles or so. So if you are looking at a daily chart, you should look at the last 6 months data or so.
  • ALWAYS trade in the direction of the trend, not against it.
  • Choose the most obvious trading opportunity, whenever you have a not-very-sure trading enviroment, always change the currency pair you are trading, there are dozens of currency pairs in the Forex market to choose from.

Forex Range Trading Strategies

Range Trading

What is a Range Bound Market (or a Ranging Market)?

A range bound market is a market that mainly moves between two lines, the upper one is called Resistance (because it resists the market from going upwards) and lower one is called Support (it supports the price in moving upwards).

forex range trading strategies

As we see in the picture, a typical range bound market goes up till it finds a resistance level, it kisses it and goes back down it it reaches a support level, kisses it then moves back to the resistance level again, and so on and on.

How can I trade in a ranging market envionment?

Whenever the market reaches a resistance and starts to bounce down, you should be selling. And whenever the market reaches a support level and starts to bounce up, you should be buying.

range trading forex

However, you should only enter a trade that agrees with the previous trend, never trade against it. So if the previous market has been an uptrend, you should only be buying. And if the previous market has been a downtrend, you should only be selling.

How to Trade Forex Successfully?

How to Trade Forex Successfully?

How to Trade Forex Successfully1: Don’t invest too much money! Some new traders like us when they first start their Forex trading experience they wonder why they wouldn’t be winning all of their trades, so they would just go ahead and make big trades believing that they should succeed. The truth is, most people who start trading this way never have successful trades.

So always remember NOT to risk more than 1% to 5% of your Forex live account when trading, and keep in mind that this way you can perform more trades and thus gain more experience.

2: Depend on more than just one factor! There are tons of ways to predict price action, watching for previous resistance or support, Fibonacci retracements, indicators, candlestick patterns, chart patterns etc. Do not decide on your trade just using one of those things, but rather try to have at least two or three of them confirming your trading decision.

3: Always remember that you don’t have to trade this particular pair! Sometimes we see the chart slightly going up and because we feel like we need to be trading, we just make believe that there is a buying opportunity there, almost half of the time (or even more often) we make the wrong decision and we get disappointed watching a downtrend formation and our money goes to waste.

The only one way out of this is to make sure that the currency pair you are about to trade have a clear trading opportunity. We have dozens and dozens of currency pairs in Forex, always choose the pairs that have an opportunity that speaks for itself.

And please do not get confused with this next tip…

4: Try to be an expert in one pair of currencies! Is there a country that you are so interested in? You know its language? Political scene? Then why don’t you go ahead and try to learn more about its currency?! Try to monitor this country’s currency’s performance and see if it could be a good Forex trading candidate. The more you know about this currency and the political system of its homeland, the more successful and smart trader you will be.

5: DO use STOPS! Many new Forex traders ignore this, thinking they could just watch the trend and decide when and where to stop the losing trade (if they believe their trade could lose at all!) Using a stop will save you money in case something goes wrong with your internet connection or device, plus, you will have a clearer picture of where you are and how far you have gone when it comes to losses.

6: Back test! Go back on the chart to earlier times and try to think what you would have done back then that would have worked in this visual future. Get more ideas and Forex trading strategies analyzing the price action of the past.