How to Enter Forex Market When Breakout
Trading Forex when the forex market is trending is very profitable. And to get the most appropriate forex market entry opportunities, trend follower traders will always observe the direction and magnitude of the strength of the trend. The only way to get maximum profit from a strong trending state is the breakout technique.
The following is an example of a strong downtrend. As well as signs such as lower low levels (lower low levels). When this happens forex traders need to wait for the most appropriate opportunities for sell entry with breakout techniques.
As shown in the picture daily chart above. Namely in May 2014, EUR / JPY has decreased by 582 pips. Which is calculated from the highest price in March 2014 (highest at 143.78 levels), by forming lower high and lower low levels. Thus it can be concluded that the movement of this currency pair is downtrend strongly.
Trading with Breakout Techniques
When a downtrend like above, you should specify the closest support level, then the lowest level at this time. If the downtrend is strong, EUR / JPY will definitely form a new low level so that the downtrend can continue. The most effective forex strategy for entering when a breakout in this situation is to use pending orders. Or pending orders are also commonly called sell stops or sell below current forex market prices.
To be more precise you can use a lower time frame, such as a 4 hour time frame (H4). In addition, also specify the level of stop loss and target (take profit) in accordance with the management risk that you agree on. Your order will be executed when the price has touched the entry level you have specified.
Conservative forex traders and aggressive forex traders.
The current lowest level is 137.96 and the trader must place the entry level below that level. Aggressive forex traders will set the sell entry level as close to the lowest level at this time. It can only be 1 pip adrift, while conservative forex traders will set the entry level somewhat far from the lowest level. If below the lowest level there is a strong level of support, then the entry level should be determined below the support level.
The level of stop loss can be determined above the current lowest level. That is in accordance with the agreed money management. This is done in order to obtain optimal results, so the risk / reward ratio should be above 1.