A notable aspect as a result of the movement of various traded currency pairs in a Forex market is the probability of getting significant early morning breakouts. As a matter of fact, these early morning breakouts are increasingly profitable if spotted early by a Forex trader since they can take an equivalent long or short position all at once. Read on this article and learn the effective strategies suggested by Yee Kok Siong for the profitable trading:
During the first half an hour of trading, take note of the highs and lows of trading. Traders go long when the price goes beyond the high recorded in the first 30 minutes. They also go short when the price goes below the low established in the first half an hour of trading. With morning break out strategy, Forex traders are able to trade these early morning break outs profitably.
The morning break out strategy looks to trade early morning breakouts during the early hours when the market has just opened at around 8:00 local time. This time is convenient because this the perfect time when best break outs occurs. In fact, the overnight trading session is characterized by small traded currency pairs since there are no major European or American traders actively involved in trading at that time. As a result, when major markets open the following day, the likelihood of break outs is high since major traders in the market are actively involved.
Yee Kok Siong an investor says that the secret behind morning break out strategy is looking on a daily basis for major pairs that have traded in the narrowest of range between the time when the major market opens at 8:00 and 12:00. Traders can determine this by keenly looking at the indicator on the daily chart that indicates the (ATR) average true range and having comparisons with the range recorded during overnight trading. For instance, let’s say the average true range is 150 points and the traded currency pair moves between 30 to 40 points before the major markets opens, this scenario creates an opportunity to make high profit margins with a big move whichever the direction as soon as the markets open and the price goes against the trend of narrow trading range.
Though not all break outs turn out to be profitable breakouts, however there is always a high probability of most break outs proving lucrative. Rather than target huge points that have significant gains but difficult to achieve, it is better to target either 20 or 30 points since they are easily achievable but also profitable.
The use of morning break out strategies in the trade of early morning break outs in the Forex market is a profitable venture. Though early morning break outs do not appear on a daily basis due to the prospect of price fluctuation during overnight trading, however they present a lot of trading opportunities to traders in the Forex market.