Utilizing Second Opportunities After Breakout in forex trading

Utilizing Second Opportunities After Breakout in forex trading

Have we ever missed a substantial breakout, but still want to participate in tasting the benefits of this important mobility? Feelings of disappointment felt when knowing the breakout had passed it could not be less painful than when breaking up with the first boyfriend. We can overcome the next disappointment by using the following tips from Cory Mitchell. That is about the day trading strategy called “Second Chance Breakout”.

What is “Second Chance Breakout” in Forex Trading?

When prices are in the range of a certain range, channel or price pattern. For example, like the triangle pattern, head and shoulder and others. There are breakout points where prices shift out of the pattern. If it’s really a breakout, the price will continue to grow in the direction of the breakout.

Mobility shows that prices have a clear direction. However, often the price that has been broken out then turns and re-tests (re-tests) the previous breakout point. sometimes it doesn’t really touch the previous breakout point, but only relatively close. Well, price mobility like this provides a second opportunity for traders to enter. As can be seen in the picture below.

Forex Trading

Forex Trading

How to get the second chance after the breakout has passed.

In the picture above there are two breakouts. The first breakout occurs in the “neck” section in the Head & Shoulder pattern, while the second breakout occurs after the formation of a small Channel.

Forex trading at the second opportunity

If the price breaks above a price pattern, then the second chance provides a buy opportunity. The price breaks below the price pattern, then the second chance is a sell opportunity.

When we are eyeing a second chance, then get ready to open a position once the pullback price enters the range of the initial breakout point. As soon as the pullback is slow and prices begin to shift in the same direction as the previous breakout, go straight to Open Position.

When exactly is meant by “starting to shift in the same direction as the previous breakout?”

The answer can be subjective and depends on what forex trading strategy or approach we choose to use. For example, an audio candlestick pattern can be used as a signal. That is, the pullback has ended and mobility is advancing in the same direction as the previous breakout has begun.

If the initial breakout is downward, then wait for the upward pullback price to approach the breakout point, then once the price starts falling again, Sell. Position a stop pip of several pips or a few ticks above the high level of the pullback.

The image below shows the same situation as the first picture. Images are equipped with appropriate SL and TP levels.

Forex Trading

Breakout in forex trading

How to get the second chance after the breakout has passed.

The target can be determined based on the price pattern and the original breakout level. Or by using a risk / reward ratio depending on which method is more suitable to be applied in market conditions or what we usually use.

What needs to be considered here: After a breakout occurs, just pullback does not present a second chance. We need to wait until the pullback ends. Or does the price begin to shift in the same direction as the previous breakout and then open a position. This is because there is no 100% guarantee that the previous breakout point will stop the pullback. Do not place pending orders near the breakout point, because they might be triggered at the wrong time.

Conclusion

It is quite difficult to “catch” the breakout, so this Second Chance Breakout day trading strategy can provide an attractive alternative. Of course to be used by traders if the rally experiences a pullback after the breakout. Although there is often a very strong breakout, there is no pullback. But the important point here is not to be disappointed when the price has already breakout. There could be a second chance for us.

However, the strategy that took advantage of the second opportunity after this breakout was not a tactic that could be used “set and forget it”. We recommend that you use it when we have time to sit in front of the forex trading platform waiting for the right moment to enter.

author
Forex4Live.com is a forex trading system website that started to be published since 2011 and has been used by thousands of traders around the world. The system is very simple and accurate, priced at $ 167 for a lifetime membership with no monthly fees or hidden fees. Our team created this system by testing thousands of indicators then selecting 23 indicators and combining them into one great trading system.
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