What do you think about my long signal (Breakout signal)?

GBP and AUD flags

Not all breakouts are created equal!

Some traders don’t like to trade breakouts, and you know what, I don’t blame them… It’s not a very pleasant experience to see the market just hit your entry order to reverse to hit your SL level…

Heck, there are even some traders that trade the infamous fakeouts (which are false breakouts)…

I guess the trader that invented that strategy didn’t do well with breakouts, did he?

Anyway…

I like to trade breakouts, but not every one of them…

I try to stay away from them when the market is choppy, or when there is a fierce battle between buyers and sellers (i.e. when the market trades at an important level), which is where most “fakeouts” happen…

But when the market conditions are right… most breakouts do work well (very well)…

My Breakout Signal

Take a look at this chart:

GBPAUD Breakout Signal

I know that the GBPAUD is trading in a bullish market condition, so I will only look for long opportunities (I’m going to ignore every short signal).

Now, based on the chart above, you also see clear short term levels, which makes me feel comfortable about taking a breakout trade…

So my buy entry stop order is at 1.7282, my SL at 1.7220 and my TP order is at 1.7680.

Pretty good risk-reward ratio isn`t it?

Please notice it is a pending order (buy stop) I’m not long yet.

Your turn

What do you think about my signal?

What is your opinion about breakout trades? fakeouts?

Please share your thoughts in the comment section.

breakout, forex, GBPAUD


Raul Lopez

I've been trading the markets for more than 15 years. I believe the best way to trade is by adapting to the market conditions. You can learn it too, join our community .