2Bull Forex Blog

If you are new to trading and looking to learn currency trading basics and ways to make money, there are lots of different methods to choose from - we are going to show you a simple method that can make big profits and be at the heart of a successful forex trading strategy.

Trading is all about having a logical currency trading system you understand and can have confidence in. If you have confidence in your methodology, you can apply it with discipline and enjoy long term currency trading success.

If of course you don’t understand a method and have confidence in it you will never be able to follow it with discipline and have no method at all.

Breakout Methodology - Why It Works

This method is easy to understand, easy to apply and can and does make big profits.

The methodology we are going to look at here is trading breakouts.

This trading involves catching breaks of important highs or lows.

Fact:

Most major moves start from new market highs and lows and this method will catch them. Most traders make the mistake of trying to buy low and sell high and when prices breakout - they wait for a pullback - but these pullbacks never come and the trader is waiting to get on board, as the trade sails away over the horizon.

If you learn to trade these breaks you can make big profits - but how do you do it?

Let’s take a look.

Using Support and Resistance

You are looking for levels that are considered important by the market and you should look for at least 3 - 4 tests preferably in time frames that are wide apart.

Generally, the more times a level has been tested the more valid it is.

Confirming the Break

You can and do get false breakouts, so it’s important that any breakout on a forex chart is supported by rising and strengthening momentum.

How do you do this?

You need some momentum oscillators to help you - we don’t have time to discuss these in full detail here but you can simply look up our other articles.

If momentum supports the break, you have a forex trading signal you can execute.

Stop Loss

Your stop loss level is obvious - and is behind the breakout.

Why Most Traders Don’t use Breakouts

Most traders find a breakout method hard to follow because they think they have missed a bit of the move and wait for the pullback - but history shows the big breaks don’t come back, they carry on and the odds are in your favour.

Patience is the Key!

The key with breakout trading is only trade valid breaks of support and resistance and be patient until they come around. You don’t get paid for how often you trade in currencies - you get paid for being right with your forex trading strategy and that’s it.

A Simple Methodology Which Works

All the best forex trading methods are simple but don’t be deceived, that doesn’t mean you won’t make money with breakouts - you can. Most of the top traders in the world use breakout methodology to some degree in their trading.

When you learn currency trading basics, you need a methodology to base your currency trading system on, breakouts are ideal and can lead you to long term currency trading success.

Online currency trading is now within reach of any trader and while the potential rewards are high - 95% of traders wipe themselves out - here we will outline the top ten novice trader mistakes.

Here they are in no particular order of importance.

1. Trying to Predict Price Movement

You don’t need to predict to win and if you predict, all you are doing is hoping and guessing where prices may go - you should trade the reality of price change on a forex chart and not try and anticipate.

2. Buying Low selling High

Linked to the above point - most traders what to buy the market low and sell the high and of course this is not possible. If you got 50% of the main trends you would be very rich. You need to aim for profits, not perfection from your forex trading and that always means missing a bit of the move at each end.

3. Following a Vendors Forex Trading System Blindly

Most systems sold are junk and come with a simulated track record done in hindsight i.e its never been traded. These normally always fail but there are a few good ones out there and traders still manage to lose money with them.

Why?

Because they don’t know how the system works, don’t have confidence in it and can never acquire discipline.

4. Day Trading

Simply doesn’t work and its obvious why - if you don’t know check our other articles.

5. Poor Money Management

If you think money management is placing a stop - or the risk of a trade is: the potential gain - the stop, then you need to learn about money management.

Most traders devise or use currency trading systems and think money management looks after itself - if you are one of those traders, change your opinion or lose quickly.

6. Following Expert News Stories

News stories are stories and that’s all, someone’s opinion - but opinions don’t make profits and most of the news stories you see reflect the greed and fear of the crowd who always lose.

7. Lack of Discipline

Lack of discipline is simply a way to lose money and you will never acquire it unless you know exactly what your doing and understand why it will be successful. Discipline only comes from having understanding and confidence.

8. Trading To Often

Many traders think they have to be in the market all the time in case they miss a move, or embark on revenge trading etc. Keep in mind you don’t get rewarded for how often you trade, you get rewarded for being right, with your trading signals and that’s it.

9. Working to Hard

On the one hand you have traders who don’t put in the required homework and on the other traders who think that the more knowledge they acquire the better their chances of success - wrong. To make money at forex trading you need to work smart, not hard and get the right forex education.

You don’t get rewarded for effort, you get your reward for being right and that’s it.

10. Not Knowing What a Trading Edge is

All successful traders have this and can define it - it’s what makes you able to enter the 5% of winners while 95% of traders lose.

Don’t know what your trading edge is?

You don’t have one and its time to learn forex trading basics until you do.

The above 10 reasons for losing at forex trading are all common and there easy to avoid if you work smart and have a desire to succeed.

Online currency trading offers you a life changing income but is not easy and you wouldn’t expect it to be with the rewards on offer. So, learn online forex trading the correct way and you can enjoy currency trading success.