In my last presentation, I covered Trading Sessions Overlap, Best Time To Trade Volume, Average Pip Movement.
If you didn’t see that presentation yet, I would recommend checking it out before proceeding.
What is a Breakout?
A breakout is essentially price moving outside of a defined support or resistance level (identified range) with increased volume.
How do traders use them?
Traders use breakouts to enter the market with clear entry, stop loss and potential target range, by applying support and resistance knowledge.
News Trading with Breakout Methods
Many short-term traders use breakout methods for big news releases (such as FOMC and NFP)
Trading Sessions with Breakout Methods
Other traders use breakouts for daily trades between trading sessions
Long Term Trading with Breakout Methods
- Long term traders use breakout methods on higher timeframes, using identified ranges during consolidation periods.
- They can use the ranges for pending orders and stop losses.
- Then apply support and resistance or supply and demand knowledge for clear take profit zones.
Let’s Keep It Simple For Now…
I have loaded a simple template that shows daily and weekly high/low lines. Many traders base their trades or entries on these values. Unfortunately, only basing your entry on this data will more than likely not be profitable over time.
BUT!
By using the previous knowledge taught in the trading session lessons, you can confidently choose the best currency pairs and trading session overlaps. You can also use the chart I made you for average pip movement for each session to give you potential target zones for your positions.
In this chart, I have loaded a simple daily and weekly high low template.
There are 2 ways to trade the Daily High/Low Breakout Strategy
Example 1
- Identify the high and low of the candles (which is shown by the indicator)
- Draw a horizontal line at each
- Set your pending orders at these levels (short if the low is broken, long if the high is broken)
- Set your stop losses at the opposite order (long entry SL would be the short entry and vice versa)
Example 2
- Identify the high and low of the candle bodies
- Draw a horizontal line at each
- Set your pending orders at these levels (short if the low is broken, long if the high is broken)
- Set your stop losses at the opposite order (long entry SL would be the short entry and vice versa)
*** Note ***
Once the first pending order fills, you will want to be sure to delete the other pending order.
Remember This Chart?
You can use the previous lessons on trading sessions to help with trading breakouts from each session as well.
We will cover the best trading sessions and how to properly trade them in upcoming lessons, but if you want to get a head start…
You can also use the chart I made you for average pip movement for each session to give you potential target zones for your positions.
Remember the Trading Session Overlap?
Right now we are in the Spring/Summer EDT overlap, and we know from previous lessons that:
Best times & Currency Pairs
3:00-5:00EDT – GBP, EUR, CHF
8:00-11:00EDT – USD, CAD, XAU
20:00-2:00EDT – JPY, AUD, NZD
1.Begin by mapping out a specific session on the top currencies that you want to break out from
2.Identify the high and low of the session
3.Now identify the breaking point (you can do this by using the start of the overlap into the next session, best time related to that session)
1.Example – Let’s say you choose the Tokyo/London Session Overlap
2.We are currently in EDT, so Tokyo is 8-5 and London is 3-11 with best time being 3-5am
4.At 3:00 you would set your pending orders of the previous high/low of the Tokyo session
1. Tokyo Open – London Open
2. Pending orders set at London Open based on previous High/Low of Tokyo
3. Break to the downside
4. Delete long pending order
There You Have it!
In my next presentation, I will be covering the New York Session Daily Breakout Strategy.
Trading Sessions & Breakout Education
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