How to trade the breakout like the professional trader

The financial market can exhibit two different moves that it either it will trending or the price will remain confined in a fixed region. Most of the novice traders make a decent profit in options trading while the market remains in the sideway direction. But once the market breaks the certain confined region the novice traders struggles hard to make a profit in the financial market since they don’t know how to be sure of the breakout. If you know that there is a possible breakout of a certain region in the forex market than you can make a decent amount of profit by trading the breakout in the forex market. If you look professional option traders than you will see all of them trade the breakout in the market since the potential reward is extremely high due to large market movement. In this article, we will discuss how to trade the breakout like the professional traders.

Look for a powerful bullish or bearish candle: Those who are involved in options trading knows very precisely that spotting breakout in the market can be extremely difficult. Most of the novice traders fall into the trap of false spike and lost a huge amount of money while trying to trade the breakouts in the market. On the contrary, the professional traders always look for a strong bullish candle in the market once the market breached certain resistance level of a pair or assets. On the contrary, they look for strong bearish candle closing for the confirmation bearish breakout. To be precise candlestick pattern can also confirm the breakout in a certain financial asset in the market. But if you are relatively new in forex trading then it will be the little bit difficult for you to spot the breakout and fake out in the market. As a trader, you should know that most of the false breakout occurs during the high impact press conference and the real breakout occurs during the solid data release just like unemployment claim or interest rate decision.

The trend is your friend: The most well-known proverb in the options trading industry that trend is your friend. If you truly want to become a successful trader in the financial market then it’s highly imperative that you trade in favor of the long-term prevailing trend in the market. Statistics suggest that most of the time the breakout occurs in favor of the long-term prevailing trend in the market. There are two ways of trading the breakout in the market. The aggressive traders will directly execute their orders in the market once the market breach a certain fixed level in any live assets, on the contrary, the conservative traders will for the minor retracement to trade the breakout. It’s true that aggressive traders are more exposed to risk while trading the breakout but they also gain the huge amount of profit upon the pin out of the perfect breakout in the market. But if you are relatively new in trading then you should choose the conservative since it will greatly reduce the risk exposure in the market. Most of the time the market retraces back the broker support and resistance level and gives the conservative traders a second chance to ride the trend.

Money management factor: This is one the most crucial element for trading the breakout perfectly in the market. If you are relatively new in options trading then you might not understand why it’s an essential element in trading. If you look at the professional trader’s portfolio then you will notice that all of them use perfect risk management factors in every single trade in the market.AS trader you will always have some losing trades in the market. When it comes to breakout trading you need to be extremely careful with your risk management factors since there are many times you will see that the breakout was false. In that case, if you don’t use proper risk management plan then there is high chance that you will end up by losing a huge amount of money. There is nothing wrong in taking managed losses in the trading. As a trader you should how to efficiently management your losing trades in the market since it will help you to remain profitable in the long run.

In summary, Trading the breakout is a little bit difficult but it can be easily done if you follow the above tips in this article. Always use the bullish or bearish confirmation signal before you execute any orders while trading the breakout in the market. Since most of the time the breakout occurs in favor of the long-term prevailing trend in the market it’s highly important that you trade along with the trend. And always make sure to use proper risk management factors while trading the breakout in the market.