Forex Trading Strategy – Channel Breakout
Forex Trading can be very profitable because the Forex Market is the largest financial market in the world.
A simple Forex Trading Strategy used in trading foreign exchange is the one known as Channel Breakout.
The “channels” are lines traced on a Forex Chart showing how the price moved in a certain period of time.
These Forex Trading channels are very simple to create because you only need to select a time span and trace lines connecting the high and the lows of the price for that currency pair.
For example select 1H Forex Chart for EUR/USD and create a “channel” for the price movement in one month.
Notice when the price of the currency pair goes over the top line of the channel or under the bottom line of the channel to see the “Channel Breakout”.
If the price goes over the top line there is an upside channel breakout and downside channel breakout in the opposite situation.
As you can see, this simple Channel Breakout Forex Trading Strategy is easy to use by any Forex Trader and it can help in deciding when to buy or to sell a certain currency pair.
Pay attention to the way you create the channels because not all the crossings are breakouts. Wait for confirmations.
You can make profits with this simple Forex Trading Strategy but make sure to put a Stop Loss on all your trades just in case you identified a “fake” channel breakout.
With proper money management your winning traders will cover your losses and you will increase your profits.
Continuous Forex Trading Education is very important to become experienced in create a “channel” and identify the correct breakouts.