Seeking Alpha

Philip Moore's  Instablog

Philip Moore
Send Message
Philip Moore is full time trader who is part of the team who run the London Forex Open breakout trading strategy. This is an early morning breakout trading strategy designed to be used on a range of currency pairs. Our core principle is to develop and refine simple, effective and long term... More
My company:
London Forex Open
My blog:
London Forex Open
View Philip Moore's Instablogs on:
  • How To Implement A Successful Breakout Strategy For Forex

    The Foreign Exchange markets hold a number of attractions for those looking to make additional money. As a result there are a number of strategies which have been developed which can be used to identify and capture profitable moves in a currency pair. One of the most popular is the breakout strategy for Forex. This trading method holds a number of advantages for the trader. It is not only one of the most simple to understand but can yield high levels of profit if implemented correctly.

    The breakout trading strategy is so named as it looks to capture the movement in a currency pair after it has broken through a prior identified level on the chart. This can be either a level of support or resistance to the most recent price action. What is important is that this level has previously constrained the price movement of the currency pair on the chart. This makes it more likely that when the level is broken, that market momentum will continue to push additional moves in the direction of the break. This is the movement on the chart that the breakout trader seeks to capture.

    The attraction of trading chart breakouts is that they can lead to high profits. The move following the initial break is often big, allowing a high number of 'pips' or profits to be booked. In addition they are a relatively simple system to trade. The individual can work out where they are going to place their price targets on the chart prior to the break happening. Position of stop levels can also be made in advance. This allows the trader to set up their orders in readiness of the break and without needing to make spontaneous decisions in the live market that many forms of trading require.

    The one downside to this method comes in the form of what is referred to as 'false breakouts.' This is when a break in the market looks set to occur but actually fails. In this scenario the market quickly reverses and moves strongly in the opposite direction of the expected market breakout. If the trader experiences this too many times they can suffer a big hit to their profits. However there are a number of things that can done to ensure that this risk in minimised.

    The best way in which to implement a successful breakout strategy is to wait for confirmation of the break. Opening your order only once the identified break point has been firmly broken will help to protect from these false moves. By positioning the enter point for the trade a margin of pips above the identified break point, the trader will help to ensure that their trades are not triggered on any false moves. Similarly by placing a tight stop loss on each order placed, a quick exit from a breakout that doesn't follow through will be ensured. This will help to minimise any loss that is incurred when the follow through momentum in the market is not present.

    Implementing a well thought out strategy to capture breakouts when trading is one of the most profitable approaches you can use to profit from trading on Forex. You will however need to ensure that you don't jump too quickly into moves and that you are prepared to exit the market quickly if the expected move does not occur. One final tip is to ensure that you trade at times when the level of market activity is at its height. To have the best chance of capturing strong chart moves you will need sufficient volume to ensure there is enough momentum to carry the move. If you follow these guidelines you will have a winning strategy to trade with.

    Read more about breakout Forex trading by visiting this Website.

    Dec 17 11:13 AM | Link | Comment!
  • Identify Key Trading Times To Maximise Your Profit Potential From Forex

    The market hours of the currency markets are an important factor that you will need to consider when trading on Foreign Exchange. While it is a known fact that you can trade around the clock on these markets, this is not always the best way to trade. It is vital that you are able to align your strategies to take advantage of the best trading times. This will not only lower your risk levels but will also ensure that you are able to make the most from your strategies. As a new trader it is essential that you know both what and when to trade.

    The trading hours of the currency markets run continuously throughout the week, but are noticeably sub divided into a number of distinct trading sessions. Each of these market trading sessions has its own set of characteristics which are the result of the dynamics of each regional market. This is because each trading window coincides with the trading hours of the financial markets in each region. So for example, when the Stock markets open in the United States, the activity on the Forex markets also increases. This reflects both the impact that news and transactions on these markets have on the Foreign Exchange markets as well as the propensity for deals to be brokered at this time.

    The key decision that an individual who is trading on Forex has to make is not only which strategy to trade, but also when is the optimum time to trade it. There are many systems and approaches that can be used to form a strategy for the markets. However the successful application of these will very much depend on identifying the best time to make use of them.

    Strategies that target market range breaks are a popular with traders and often have a defined time of the day when it is best to trade them. With breakout trading this is most commonly the opening of a market session. The reason for this is that market tends to peak at these times and therefore traded volumes also tend to be correspondingly high.

    At this time of day traders will seek to reposition their holdings following overnight news and react to the latest economic and political developments that have occurred in the previous time zones. In addition this time of day is one of the most active in terms of the release of the latest market data concerning the local regional markets. This can have a great impact on the perceived valuation of a currency and therefore the direction that a currency pair will move. This provides the opportunity to pocket large profits for the trader if they are able to identify the most probable early directional moves that a currency pair will take.

    This impact from taking a position during the early part of a trading session can be profound. Often directional trends that are set at this time of the day will perpetuate into subsequent sessions. So not only can good pips be booked from early market breaks, so too positions can be held for longer periods, often until the end of the day. Essentially making a good call at the start of the day can see the opportunity to jump on key developing trends that persist. This approach can therefore make for a simple and highly effective trading strategy.

    You can find out more about trading strategies that target market range breaks at the opening of the London Forex markets by visiting www.londonforexopen.com

    Jun 21 10:33 AM | Link | Comment!
Full index of posts »
Latest Followers
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.