Breakout Trading Strategy

[forex-101]

Hi,

I have found a strategy that is based on trading during the volatile period after major news releases - Breakout Trading Strategy.
Has anyone tried something like that ? Or there is too much risk involved, since you have huge price swings after the release and false breakouts happen pretty often.

Mike.

[fx-expert]

Hi,

The strategy that you found is a simple collar or sometimes called straddle, where you place to orders - one to buy and one to sell and wait for the price to breakout triggering one of your orders.
False breakouts often occur, especially when the release came close to market expectations and traders fade the breakout (i.e place trades in the direction opposite to the initial price movement). Although the stategy relies on "true" breakouts it can still work during a false breakout if you take the profits quickly and don't get greedy plus you put very tight stops to minimize the risk.

Steve

[scorpion]

The problem with BB breakout is that price never completely gets out of the BB bands for long. I'd say 50% of the time, it will bounce back just moment after breakout, so that's not good.

We've Super SR here that makes good breakout indicator. It's damn nice. Check it out (use search).

[Mc_Duck]

I think nowadays the biggest problem with breakout/news trading strategies is that brokers widen the spread sometimes up to 10 pips before the news, so that even is one of your orders is hit you would end up with a very small profit or even a loss if the move is not that big. So be careful trading news breakouts.

Mc Duck

[scorpion]

Right. It's not quite a good idea to trade during the news is released. Volatility is sometimes too fast. But some other times for less important news, it's pretty ok to do that, as volatility is only moderate, and spread at oanda is still around 1.5 pips.

Alternatively, you can trade 30 mins before news release. Using fxfisherman's forecast (on the left), trading news is easy.

[glenn5t]

I trade the London breakout but not News, in fact I avoid the news.

simply I use a 6 hour box prior to London opening, thats the breakout.

Also scorpion's indicator is very good for trading S/R .


Glenn

[nicesurf]

Trading news is profitable but we got to start 5 minutes before the news released and we use hedging system.

Nic

[scorpion]

nicesurf, i'm interested in your hedging system. It'd be great if you could share.

[abodundef@yahoo.com]

how many pips away from present price if you are using hedging system