Predicting the price movements in the Forex market is a very tough task. You may have strong analytical knowledge. Still, it can be difficult for you to find the best possible trade signals. The rookies often get confused as the market keeps on generating false signals. Those who are involved with the breakout trading system face the worst situation during such breakout. Trading the breakout might seem tricky; you can quickly master this by following some basic techniques.
The professional trader deals with the major breakout based on fixed sets of rules. By using some advanced trading techniques, they efficiently deal with the major breakout. Now let’s learn some fantastic techniques by which we can trade the breakout like a pro trader.
Chose the correct time frame
Most retail traders struggle with their trading profession as they don’t know the proper way to choose the right time frame. They keep on trading the market with the lower time frame and mess things up. In the lower time frame, the trade signals are not accurate and create confusion for the retail traders. Even if you analyse the 30 minute chart, you will be surprised to see the number of false spikes. On the contrary, you will find much more reliable trade signals if you switch back to the hourly or the daily chart.
You might be using a lower time frame-based trading method from the starting of your career. It is okay if you don’t intend to trade the breakout. When you decide to deal with the major breakout, it would be wise to select a higher time frame trading strategy.
Choosing a premium broker
Always select your broker cautiously. The majority of the elite traders in Norway prefer to trade with Saxo as they provide high-end tools to their clients. Unless you can trade the market in the fast-paced trading environment, there is no chance you will execute the trade at the perfect price during the breakout. Moreover, you will fail to identify the correct signals with a slight delay in the price feed.
The low-end brokers will always encourage you to trade with them and give you lucrative offers. They will provide you with access to the high leverage trading account. You will never learn to deal with the major breakout like a pro trader if you take their offer.
Use of candlestick pattern
Using the candlestick pattern is by far the most efficient way to find reliable trade signals in the market. You can quickly identify whether the support or resistance level is holding or not. Though learning about the candlestick patterns at the initial stage will be a big challenge, you can always use the demo trading account. Use a demo trading account initially; it will give you the perfect environment to fine-tune your breakout trading strategy.
As a novice trader, never try to learn about the complex candlestick patterns without going through the basic patterns. Start with the less complicated patterns and then move to the tricky part of trading. Keep your faith and stick to a demo account in the learning stage.
Be aware of the risk factors
To trade the major breakout, you should be extremely careful about the risk factors. Following the regular 2% rule of risk management will not work in a breakout trading strategy. It would be wise to lower down the risk to 1% as it will give you more confidence. Never expect that you will keep on winning the trades while trading the major breakout. Be prepared to deal with a few losing trades once in a while. Once you develop your mentality to embrace the losing orders, you should not face much trouble dealing with the major breakouts.
