What is Breakout Trading in Forex Market Advantages Disadvantages - forex trading courses perth

What is Breakout Trading in Forex Market Advantages Disadvantages ~ forex trading courses perth

What’s so good about breakout trading? Well, there are several reasons and to list a few:
1. As a breakout trader, you are a market follower. You just go with the flow instead of whining that you bought low or sold high, against the market, while the market was unstoppable.


2. If things go wrong, you can still blame the market instead of blaming yourself, since you are a market follower (see 1. above), right? – I guess this qualifies as a morale booster. It’s always better to blame something/someone else instead of blaming yourself, thus losing confidence in what you’re doing – and you certainly DON’T want to lose confidence in what you’re doing, because knowing your stuff and believing in what you do is what trading is all about.
3. Chances are that you will jump into some violent moves in your favor, as best breakouts usually occur fast, market being driven by tons of stop-loss orders getting filled on its way (we all know most people set their stops above/below recent highs/lows or range tops/bottoms)

And some of the disadvantages:
1. Many times you need a larger stop loss, compared to buying around support or selling at resistance, because you should allow for some corrective movements against the position. Corrections are normal and they occur all the time. A tight stop is easily hit during a corrective phase once a resistance/support is breached and you just jumped into a breakout trade. Keep in mind that market has a habit of re-testing a key level from the opposite side once it’s been breached (i.e.: support becomes resistance and vice-versa). The re-test is what confirms that a change or role occurred, and that’s when you start questioning whether the breakout was real or fake – and tight stops or manual closing/reversing become some of the things to put on the “Don’t Do This” list.
2. Many breakouts fail (doh – playing the Captain Obvious role here). Else, everyone would trade breakouts and know each other because they’d be sharing the same exotic beaches somewhere. Anyway, once you become familiar to these kind of market movements, it should be easier to identify a real breakout when you see it.

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Advantages of the Forex Trading than other types of financial trading - forex trading courses singapore

Advantages of the Forex Trading than other types of financial trading ~ forex trading courses singapore

There are several advantages of the Forex market over some other types of financial trading.
When talking about various investments that are accessible to almost everyone, there is one type that springs to mind. The Forex or foreign exchange market has many advantages over other types of tradin. Since it is an OTC (over-the-counter) market, the Forex market is open 24 hours a day, unlike the regular stock or commodity markets. 



Most investments require a significant amount of money before you can take advantage of that investment opportunity. You only need a small amount of capital to trade Forex. Everyone can enter the market with as little as $1 to trade a "micro account", which allows you to open positions of 1,000 units. One lot of 1,000 units of currency is equal to 1 contract in micro account. Each "pip" or "tick" (smallest currency rate movement up or down) is worth $0.10 profit or loss, depending on wheather you are going with the market or against it. A Forex mini account gives you control over 10,000 units of currency, where one pip is worth $1.00. While a standard account gives you control over 100,000 units of currency, and a pip here is usually worth $10.00.

Forex is also one of the most liquid markets. When trading currencies on the spot Forex market you have full control of your capital, meaning that you can buy and sell your positions anytime during market open period. This is a definite advantage because, if you need to use your account money, it can be accessed immediately without additional commission or waiting periods. Many other types of investments require holding your money up for rather long periods of time.

Also, in Forex, with a small amount of money, you can control bigger market positions using the leverage or margin trading. Leverage of 1:100 is common in the Fore market. It allows you to control amounts 100 times bigger than your capital, while leverage of 1:500 and 1:1000 can be found with some offshore companies.

Forex traders can be profitable in bullish or bearish market conditions. Stock market traders need stock prices to rise in order to take a profit, since short-selling is a subject to strict limits in stock exchanges. Forex traders can make a profit during both uptrends and downtrends. Forex trading is rightfully considered risky but with a good trading system to follow, good money management skills, and some level of self-discipline, the risks of Forex trading can be minimized considerably.

The Forex market can be traded anytime and anywhere. As long as you have access to a computer and internet, you have the ability to trade the Forex market. An important thing to remember before jumping into trading currencies is that it is worth practicing with "paper money", or "fake money", on the demo account. Most foreign exchange brokers have demo accounts where you can download their trading platform and practice in real-time with real market data but with "virtual money". While profitable demo trading cannot guarantee your success with real money, practicing can give you a huge advantage to become better prepared when you start trading with your real, hard-earned money.

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