Here we will look at the concept of tracking Forex price action through charts and making huge FX profits with a simple and proven method. If you use the attached FX strategy, you will see every major trend and gain, so let's look at it in more detail.
If you look at a chart of a currency pair, you see major trends that last for weeks and these trends can bring you fantastic profits if you know how to get in. The good news is that the big trends all start and continue in the same way – they break air resistance and then go higher and this is called a breakthrough. If you trade breakouts, you have a simple and powerful method that simply follows price action and brings you to all major trends.
Of course, not every breach of resistance will see a new trend develop and many will not continue. To make a profit, you need to know which breaks offer you the best opportunities – before you enter your trade signal.
The best breaks are those that occur after a level has been tested a few times and becomes important to other traders. If a level has been tested a few times, traders want to go short in resistance and have their stop behind. The more often the level is tested, the more stops clustered just behind the resistor. When the break occurs, these stops are activated and push the price away from the breakout point, after which new technical purchases are made that push the price further from the breakout point and a new trend is born.
Regarding the number of tests before the break, I like about 4 – 6 and ideally I want 2 of those testes to be at least a month apart. The break is even better if most people think that the currency should go the other way. The reason that these breaks are better is simple – the vast majority of traders always lose money and many stops are likely to be made because the resistance fades and removes these losers from the market.
The simple method above gives you money and not only gives you access to all the major trends, so you can only trade a few times a week and achieve a three-figure profit. If you want to achieve currency trading successfully, there is no better method than breakout trading.