In this series of blog post, I shall be showing you the various trading example for those strategies that I have shared with you in my post.

In today example, I will be showing you how to trade the forex breakout system that I have written about in my post.

Currency Pair: EURUSD

Date of Example: 18 March 2011 0100hr

Indicators Required: Bollinger Bands

First of all, we can see the formation of a trend channel and therefore we will draw a support and resistance trend line.

At 0100 hr, the price actually breaks below the support trend line. However we usually are not able to enter a trade at the exact time of breakout. Therefore I will usually wait for the price to come back to retest the new resistance that is formed by the old support before entering a position.

Where to place your stop loss?

I will usually place the stop loss 30 pips above the breakout level and if you are trading a 1:2 risk reward ratio, you will place your target profit 60 pips away. However the forex breakout system can usually have a risk reward ratio as high as 1:5.

Outcome

The price moves down for 400 pips in total.

I shall be adding in more examples on different forex strategies that I have talked about in this blog so that you can have a feel of how those strategies work.