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The Biggest moves start from new market highs NOT market lows.
This fact is significant as most traders particularly novice traders, like to:
“Buy low and sell high”
While this wisdom is commonly accepted, you will NEVER catch the really big trends if you follow it.
Why?
If a market starts to trend from a new market high (and almost all the biggest trends do) you will wait for a pullback that never comes and never get on board with the best risk to reward.
In currency trading a better way to trade is:
“To buy high and sell higher”
While you will miss a bit of the move that’s ok - the odds are on your side of the trend continuing.
If a market breaks up from a new market high, you have a trend in motion on your side and remember:
“A trend in motion is more likely to continue than reverse”
Catching the big moves.
If you constantly look for trades to breakout above resistance and make new highs then you can trade with low risk and high reward
You will also have the comfort of knowing most traders can't do this; as they are stuck in the mindset of:
“Buying low and selling high”
Most traders lose in currency trading because of this inability to buy breakouts.
Breakouts also provide another advantage for traders low risk.
Why?
Because stop levels are obvious and tight, keeping risk small.
You can increase your odds of success further by:
1. Only buying breakouts of valid well established resistance that has been tested several times.
2. Using momentum indicators such as stochastics and RSI, to check price momentum is accelerating as the breakout occurs.
A breakout accompanied by an acceleration of price momentum increases the odds of the trade being successful.
Most FOREX traders see a big move develop and wait for a pullback that never comes. They then watch in frustration as the trade turns into one of the major moves of the year.
If you buy the breakout, you won’t miss these big moves and profits.
It may feel uncomfortable to do at times, but that’s why it’s so profitable – Most traders simply don’t have the mindset to do it.
So to make money in FOREX trading keep in mind:
Buy high and sell higher is the way to make money Not Buy low sell high!
Buy breakouts and you will increase your profitability, get low risk and catch the mega trends.
Good Luck!
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