Here I am going to share with you a simple proven methodology which is a proven way to make money in forex trading and will continue to work. Let's look at the method and how it works...
Before we start, let's make a couple of points about forex trading.
1. You don't get rewarded for effort or how hard you work. Your judged on being right.
2. Forex trading systems should be simple, as simple systems work better than complicated ones which have too many elements to break.
A Recurring Phenomenon
Take a look at a forex chart and think where do all the big trends start and continue from? New highs or new lows.
Trading the Breakout
Breakouts to new market highs or lows and this is the methodology, we want to use and it will always work as most traders cannot buy or sell breakouts. Most traders have the idea they want to buy low sell high, so when a break occurs they want to get in at a better price on a pullback but of course, on the big breaks the price does NOT pullback and the trader is left thinking what might have been.
Why Most Traders Can't do it
Breakouts work and will continue to do so. If you grit your teeth and enter on the break then the odds are in your favour but not all Breakouts are successful, so how do you pick the ones that have the highest odds of success?
Isolating and Spotting the Best Opportunities
Generally, the more times a support and resistance level has been tested, before it breaks the better and if this is in several time periods, all the better and the wider they are spaced apart the better. You are looking for levels the market considers important and if it breaks and the majority disagree its likely to be a good one!
These big breakouts don't come around that often so you need to be patient but when they do come the potential is huge.
Confirming the Move.
You need to confirm that buying or selling is accelerating when the break occurs and for this you need to use some momentum indicators and 2 of the best are the stochastic and the RSI. These are visual indicators and are covered in our other articles look them up. If they agree with the break, go with it.
Money Management
When the break occurs, put your stop behind the breakout point and wait until the move is well underway, before trailing your stop. Don't put your stop to close, or within normal volatility - you will get bumped out the trade.
Hold it back and trail slowly.
Sure you miss a bit of profit when the trend eventually turns - but as you don't know when this will happen, so that's ok. If you caught 50% of every major trend, you would be very rich.
A Simple, Timeless Way to Make Money
The above is a simple, easy to understand, timeless way to make money and most traders cant or wont do it, don't let that worry you though, the bulk of traders lose.
You can put together a simple breakout trading strategy in about 1 or 2 weeks and soon be making big triple digit profits in less than 30 minutes a day.
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Article Source: http://EzineArticles.com/?expert=Samuel_Leslie_Berkovits
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