Day strategies tool trading breakout

With the holiday coming tomorrow, I wanted to write a short price action article with 3 quick, but highly useful tips for trading breakouts. If you can add these to your price action toolbox when trading breakouts, you can increase your success rate significantly when trading them.

One of the key components to a successful breakout is volatility. This helps the breakout bar to take out more stops and push the market further in the breakout direction. But, volatility fluctuates tremendously throughout the day. Statistical analysis has pointed out to how breakout strategies actually function far better during the London and NY session while tend to fail during Asian market hours.

This is simply to do with volatility, so the time of the day you take the breakout trade will have an impact on the success of your trade. Ideally, breakout trades are taken during the following times; -1st three hours of London session mins before NY open up to 30mins before London close. A great example of this is in the chart below how price consolidated for a day and a half, then broke out massively during the 2nd hour of the London session. Outside of these times, the probabilities decrease for your breakout trade variably depending upon hour as volatility is either low or in a declining phase and may not have the order flow behind it to break through the key levels.

Also avoid taking breakout trades several hours prior to major economic announcements, or going into major holidays where trading and liquidity will be subdued.

Daily FX has a useful piece of data in their technical analysis page whereby they publish a Volatility Percentile feature.

You can simply check the data at any time per pair to see where the volatility percentile figure is at. If several of the pairs are above these percentages, then there is broad market participation which will likely create strong impulsive moves in the market which are ideal for breakout trading. Regardless of what the clues are, the longer the compression in the price action, the better. Markets, traders and brokers do not like tightly bound up price action.

Smaller ranges and markets mean less continuation and directional follow through. If markets turn around quickly, they offer us less profit in the direction we have chose.

But a long compression in the price action will build up a pressure and friction which eventually needs to be released. The longer this builds, the better, for when it breaks out, the market can often go for a large move in the breakout direction as seen in the chart below. You will notice in the chart above how the price action was consolidated in a tight pip range for almost two months.

But when it broke out, forming the breakout barit sold off for the next 5 days in a row, 11 out of 12 days and 13 of 15 days, selling off for over pips.

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Breakout trades can offer some really profitable opportunities, but can be maximized by adding these three tips above which are; 1 Time of the Day 2 Using Options Volatility Data 3 Looking for long compression periods prior to the breakout. If you can learn how to spot these, along with other various price action clues, you can increase the profitability and success rate to your breakout trading.

I'm Chris CapreFounder of 2ndSkiesForex. I help traders of citi global foreign currency account levels change the way they think, trade and perform.

As a professional trader, I specialize in trading price action. As a teacher, my passion lies in showing you how to re-wire your brain for successful trading. Want to improve your edge right now? Visit my Price Action Course page. Hi Chris, Do you have another way to measure volatility of a pair? The range on that sucker seems like it will go on forever, at least three months from my count.

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I hear this is due to the SNB intervention. What kind of purchases would the SNB be making to keep this pair up? As to how long can they hold it? Stockport council trading standards idea, but these things never really work out in the long run.

Its hard for me to comment on your breakout trades during the Asian session because I do not know your system or what kind of breakout you are trading. As a whole, liquidity is lower during the Asian session, so breakout type trades have to be qualified differently.

Can you send me a Link to the Tool of the Volatility percentile Naics code for stock trading. Just go to dailyfx. I went to the dailyfx. But I find it now on dailyfx. This is a really useful Article. Please how can I be a regular recipient of your articles, blogs and the like. NO FINANCIAL ADVICE - The Information on 2ndSkiesForex.

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Ideally, breakout trades are taken during the following times; -1st how do i buy centrica shares hours of London session mins before NY open up to 30mins before London close A great example of this is in the chart below how price consolidated for a day and a half, then broke out massively during the 2nd hour of the London session.

In Conclusion Breakout trades can offer some really profitable opportunities, but can be maximized by adding these three tips above which are; 1 Time of the Day 2 Using Options Volatility Data 3 Looking for long compression periods prior to the breakout If you can learn how to spot these, along with other various price action clues, you can increase the profitability and success rate to your breakout trading.

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You Might Also Enjoy. Hope that helps Kind regards Chris. Chris, thanks for the article. Eventually, it will break. Hello Vasu, Its hard for me to comment on your breakout trades during the Asian session because I do not know your system or what kind of breakout you are trading. Whereas in the NY session, there is more volatility for the push a breakout generally needs.

But these can be mitigated once you learn how to properly qualify breakouts. Kind Regards, Chris Capre. Hope this helps and glad you liked the article. Thanks Chris, I went to the dailyfx. Trading With Price Action Context Engagements. My End Of Year Message To You From 2ndSkiesForex 0 Engagements. How We Change Your Trading Mindset at 2ndSkiesForex 0 Engagements.

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