Breakout trading can be highly profitable yet at the same time frustrating as many breakouts have a tendency to fail. The main cause behind most of these false breakouts in the forex market is the big players that intentionally cause pairs to breakout in order to suck in non suspecting or inexperienced players.
Breakout trading is all about learning how to avoid trading a false breakout. You need to develop a price filter that can help you screen a false breakout from a true breakout so that you can trade it.
Risk to award ratio is often used when evaluating the risk of a Forex trading strategy, be it manual or automated. It’s one simple number that can tell a lot about a strategy. In fact, this number alone can tell a good strategy from a bad one. So what is the Risk to Award ratio and how do we use it?
Foreign Exchange Market or Forex is currency trading market and is similar to stock market. The currency pairs are on a trade like shares, only the difference is Forex is much simpler and a lot more active. It is said that because it’s more active, it is a lot more risky. However, in my opinion it doesn’t matter how fast market moves, the risk involved is highly subject to the trader himself. When further comparing stock market and Forex, we must note that sometimes the shares can plummet overnight like none currency pair would ever.