If you want a timeless way to make money which is easy to understand and apply, you can base your currency trading system on trading breakouts. Here we will look at the concept of breakout trading and how to incorporate it in your currency trading strategy for consistent profits.

First lets start with the logic this currency trading method is based upon, look how to build a successful breakout strategy and a free one you can use right now for bigger profits

The Logic of Breakout Trading

The logic of breakout trading is simple and is based on how all the big bullish trends start and continue and that's by breaking to new market highs. If you look at any currency chart you will see this happen when, big trends start and they will continue to breakout to new highs as the trend continues.

Most traders don't like trading breakouts and when one occurs, they want to wait for a pull back so they can get in right at the start of the move but the good breakouts don't pull back they continue and this trader never gets into the market. You can't predict exact bottoms in the currency market or get in exactly where you want to that's not possible so don't try. If you hit breakouts, you are trading with the odds on your side and while you have missed the start of the move that doesn't matter, if there is the potential for thousands in profit ahead of you.

Breakout trading remains, one of the best trading methodologies to use because as long as markets trend breakout trading will work and that won't ever change – now lets look at putting together a simple currency trading system to trade breakouts.

Building a Breakout Trading System

Building a currency trading system based on breakouts is easy – all you need to do is look for levels of resistance on a currency trading chart which have been tested a few times and are considered important by the market and then, you simply wait for them to break before executing your currency trading signal.

When looking at levels to break the following points should be kept in mind:

1. The more tests of the breakout level before it gives way the better and you should really look for 6 tests or more.

    

2. The distance between the breaks in terms of time is also important and you should look for at least two tests to be spaced at least a month apart or more.

When the level breaks market timing is taken care of for you, because you simply go with the break.

You can also add some indicators to help you check the velocity of price is increasing through the breakout point but restrict yourself to just 2 or 3 confirming indicators because that's all you need. Use to many trading indicators and you will get conflicting signals and miss some good moves.

Money Management

Money management is easy – as soon as the breakout point gives way, you place your stop loss directly under the breakout point and this will give you close risk protection. You will get stopped out a lot of the time when trading breakouts but if you keep your losses small, you only need a few winners to make an overall profit. I know traders who lose 70% of the time trading breakouts but still make triple digit annual gains because their winning trades are much bigger than their losers.

Free Breakout Trading Systems

If you want a simple breakout trading system which works, check out Richard Donchian's rule, you will find more info on this legendary currency trader and this simple system on this site and don't be fooled by it's simplicity it works!

Final Words

If you want a simple timeless method to make money which is easy to understand and have confidence in use a simple currency trading system based on trading breakouts and you can make some great trading profits, in around 30 minutes a day.