Daily Breakout Strategy - Riding the Momentum for Fast Gains - Advanced Forex Strategies

Daily Breakout Strategy – Riding the Momentum for Fast Gains

The Daily Breakout Strategy is a relatively simple strategy involving a number of different sub-strategies. The fundamental principle remains the same, which is to try and cash in on “daily breakouts”, i.e. points of support and resistance in the markets. On the basis of these points, a number of different sub-strategies can in turn be worked out with ease.

Understanding market breakouts

Breakouts occur in the markets when prices overcome barriers that are otherwise unfailingly present. These barriers could be in the form of particular price points or even areas on the trend line beyond which prices tend to be rather stubborn, neither going above nor below the same. But ultimately, when prices do move beyond these barrier points, that is when a market breakout is said to have occurred.

Related: Highly Reliable Strategy that is Generates Four Figure Income Per Week

Timelines

In the context of numerous sub-strategies of the daily breakout strategy that we mentioned earlier, it would be pertinent to remember that timelines do have a significant impact. For instance, you may plan for a daily breakout strategy looking at specific time periods within trading hours, say 4 hours. Within these time frames, the kind of strategy that you are able to work out successfully, will ultimately determine the exact nature of the sub-strategy that you are looking to make the most of.

In this article, our focus is clearly on the 1-day breakout strategy, which is why we have titled it as “daily breakout strategy” since our focus will be on breakouts that occur over the course of the trading day. The chart below gives you a very good perspective on such daily fluctuations that occur in currency pairs (like EUR / USD in this instance).

Daily Breakout StrategyImage Courtesy: DailyFX.com

It would also be pertinent to understand the rationale behind these choices; when we opt for either 4 hours or daily breakout strategies, we give ourselves just the right amount of time to capitalize upon breakouts that occur eventually; otherwise, around these time frames, prices tend to remain somewhat resistant to change. Therefore, when a breakout eventually occurs around these time frames, the impact is significant enough to actually make a difference to your trade.

Related: Maximum Gains with Minimal Risk Using The Four Figure Forex Strategy

Choice of currencies

A common question we come across all too often in the context of the daily breakout strategy is the choice of currencies; well, as experience clearly tells us, this is a strategy that works quite well with practically any currency pair. Having said that, it is always advisable to test out a few currency pairs and see for yourself the kind of experience that you have. If for instance, you seem to comprehend things better with a particular currency pair or set of pairs – and possibly see obvious profits in them and not others, you might be better off sticking to those currency pairs only over time. Yet, retain an open mind for best results in the long term.

See the chart below for a very good perspective on this; note the level of fastidiousness that is involved at each step:

 

Daily Breakout Strategy on EURUSDImage courtesy: FXTSP.com

 

Daily Breakout Strategy can be a highly effective Cash Flow Generation Strategy

In conclusion we can stress on the simplicity of the daily breakout strategy; it is relatively easy to understand and eventually master. Moreover, once you get a good hang of things, profits can be substantial, with relatively less effort.

The key is to spot breakouts well and then gauge the direction the market is taking eventually.

This intuitive ability will of course not come overnight. That is the reason we stress on observing the markets over a reasonable time frame, say 3 months and see how price movements play up. As you make your observations, you will have a good idea of the way breakouts occur, and indeed their overall dynamics.

A final note would be in the context of precision – as a savvy trader, it is quintessential that you retain a high degree of precision when it comes to the points at which you enter the market, arrive at stop-loss and eventually rake in your profits; without this high level of accuracy, you may not make the kind of profits that you otherwise would have envisioned.


Claim Your $60 No Deposit Bonus Here

All you need is to have your live account verified!
Of course, you need to open a live account...

2 Brokers that we like A LOT!
USD30 from each Forex Broker Below.
Both Forex Brokers have excellent rating!

Broker #1

Broker #2

We use both of these brokers and proudly promote them!

NOTE: Not all countries qualify for these bonuses. Terms and Condition Applies.

Other Analysis Today
Learn and SHARE the Knowledge!
Advanced Forex Strategies



The AllPips Trend Indicator
100% Free Download
No Credit Card Required 



Tell Us Where to Send this Powerful indicator!

x