If you are looking for a currency trading strategy which is easy to understand, makes big gains, is time efficient and will always work, then you should consider currency breakout trading which we will look at in this article.

Breakout trading is defined as buying breaks through resistance to new chart highs in a bull market and selling breaks to new lows in a bear market. While this seems a simplistic way to make money its based on sound logic which is all new big trends start and continue by breakouts.

While this currency trading strategy is easy to understand and implement, most currency traders ignore and the reason they do, is because they want to buy an exact low or sell an exact high and breakout trading doesn't allow you to do this;  you are buying a trend in motion and by the very nature of breakout trading you miss the first part of the move. However as prediction is really hoping or guessing so there is no point in basing your strategy on this methodology. By trading breakouts always remember that, a trend in motion is more likely to continue than reverse and if you focus on the huge profit potential ahead of you rather, than the little bit of the trend you have missed, you will see why breakout trading is so effective and so profitable.

If you understand the above, you now need a currency breakout strategy which can make you money and the following tips, will help you maximise your profit potential.

 You need to only look for levels which have been tested several times before the break – while the minimum number of tests in two, you should ideally look for 6 or more and furthermore, the wider the tests are apart in terms of time the better the odds of the breakout continuing when the break finally occurs.

You can use just support and resistance levels in your breakout trading strategy but you will increase your odds of success if you add in some momentum indicators which can help you gauge the strength of momentum when the break occurs. There are a number of indicators you can use but the best in my view are – the stochastic, RSI, ADX and MACD indicators.

Once you have a breakout trading system, you need to not only think about the entry of your trading signals but also your exist strategy and this is easy, you place your stop directly under the breakout point which gives you low risk and if the break is a good one, your profit potential is excellent in terms of your risk to reward. When trailing the stop give the market room to breathe and move your stop up slowly. Many traders put their stops to close and get stopped out by normal market volatility, so make sure you don't make the same mistake.

Most novice traders ignore breakout trading but it remains one of the easiest to understand and most effective ways to make money in Forex trading - so try currency breakout trading for yourself and get on the road to trading success.