Breakout Candles Made EASY – Forex Trading 101
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How can we tell a breakout candle is valid? What makes a breakout candle a good entry signal?
Here are my tips for trading the breakout. Number ONE? Use the appropriate time frame! This is very subjective but remember, the higher the time frame the less likely you will experience a breakout. The fallback being you won’t get a great risk/reward if price moves quickly. Determine what works for your risk tolerance and strategy.
Number two. Determine is the structure you used is VALID. Go back through history and watch where price touched and rejected the area you’re looking at. If this rarely happened do not use that particular area.
The third thing we look at is WICK breaks vs BODY breaks. For me personally, I need to see the full body break above structure and CLOSE. This helps me avoid false breakouts.
Last is confirmation. This is pretty self explanatory but we really want to see the candle after the breakout push toward our intended direction. If I see a strong pullback directly after the breakout it’s a sign that I shouldn’t enter that trade. This means less opportunity but better accuracy.
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