The Highly Effective Breakout Strategy
The Breakout Strategy is one of the most effective trading strategies for making very high profits.
The breakout strategy is a highly effective and simple trading tool which is employed by many expert traders for noting down the assets trend in its earliest phases, thus giving the trader an opportunity to make a winning and highly profitable investment.
How the Breakout Strategy Works
The signals for the breakout strategy trades appear as the volatility rises with prices, rising and falling below their actual ranges. With the help of proper money management tips, these breakout traders can lessen the risk of a loss and take on approaching price moves as other traders may be unaware of the new trend.
This is a major advantage in financial investments, as most expert traders know, being amongst the first in entering a winning trade will make certain you will maximize your profits and the binary options breakout strategy does exactly that.
Why a Breakout Occurs
The binary options breakout strategy takes place when the price of an asset exceeds beyond their resistance levels, it may be a high or low resistance level for that matter.
Long positions are shown when values cross over the resistance. In case of short positions, prices drop under a given level of support. These breaks are rare and unexpected and the markets are generally unaware of this taking place.
As a result of this, the volatility of the asset increases. Most of the traders have a stop loss order in place if the range trading increases to avoid loss. The commonly defined range is exceeded and trading stops for most traders. However, prices have a potential to rise and gain momentum.
The breakouts are visible on all timeframes. In case of long term charts, notable changes are seen in volatility and momentum which indicates suitable trading for ambitious traders. Similar rules on all chart timeframe, whereas the breakouts observed on a monthly basis have greater chances of displaying a true change. This shows the reality of the breakout strategy.
The advised breakout strategy steps:
This is the advisable method of following the breakout strategy to maximum benefits:
Find the appropriate binary option
Take time and find the assets that have the tendency to have strong resistance levels. The outcome is better for strong resistance assets. Thus, carefully comb through the assets.
Wait for assets prices to make the first move. Wait until the end for the breakout as asset prices exceeds the resistance level.
Set an attainable goal
Ensure you are aware of the direction of the assets price as a whole. This will be in your advantage as exiting the trade will become difficult if the assets price moves against your initial prediction. Calculate the average move which the stock prices make. Note down its resistance level.
The acid test
This step is very important for the trader. When the price of an asset breaks the resistance level, the previous resistance becomes the next support. The old support is now the new resistance. In most of the cases, the asset tests the level broken after a few days.
Breaking the resistance
If the asset tests the resistance level and a breakthrough occurs than the binary options breakout strategy has failed. This would probably mean that this particular investment will go south unless the market changes direction once more prior to the options expiry time.
Exiting as market closes
It is vital to predict the direction of the assets price in the preliminary stages of the investment and prior to the trade itself.
This is why stock traders wait for the market to close to get a clearer picture of whether the trade is a losing trade or a winning one. In case the stock remains outside the resistance level when market closes, it’s time to end the position.
The main advantage in binary options trading is knowing the expiry date in advance, that and the ability to trade in a short timeframe (the 60 second trade) allows investors to close all positions on a daily basis thus not being exposed to losses in volatile markets.
The binary options breakout strategy revolves around volatility. The prices move in a fast and volatile manner, when volatility occurs subsequent to a breakout. This offers the ambitious and experienced traders to acquire great amounts of profits.
If you are a new trader you should undoubtedly become familiar with the Breakout Strategy, it is highly affective and when applied correctly, it can assist you in making very high profits.