Conditionally all trading strategies of Forex are divided into two large groups; breakout and rebound. Below, we will look in detail at what the breakout strategy is for Forex, although nothing prevents using it for the stock market, commodity market and any other. This class of strategies is highly effective, and their main drawback is only the difficulty of determining a false breakdown, which sometimes forces you to open a transaction where you should not have done so.
In this regard, below will be considered individual subspecies of breakout strategies on Forex based volatility, CCI indicators, and similar oscillators, trend instruments such as the moving average, etc. At the same time, the strengths and weaknesses of the main trading approaches will be shown, which will allow each trader to significantly increase the accuracy of market analysis, regardless of what kind of strategy he uses to work.
Strategies for breaking the boundaries of the price channel are well proven, and in addition to accurate inputs within the framework of hand-held systems, they are easily translated into a programmatic view. Therefore, in the network now you can meet many trading advisors, whose algorithms rely on one of the strategies of this class.
Breakout Forex Strategies
The indicator takes into account a certain number of closed trade candles, determining on them local extremes, which, when connected, form the upper and lower boundary of the channel. At the moment when the price breaks the upper limit, they enter into long positions, and, accordingly, when the lower boundary is crossed, transactions for sale are opened.
In the classical form, this trading system, actively used in the 90s of the 20th century, ceased to be universal, but if you spend time tuning it personally for a specific trading instrument and timeframe with the use of additional filters, even now it will show good results.