Breakouts And Reversals

Failing to capitalize on strong forex moves is not necessarily a bad thing. However, missing out on too many opportunities can lead traders to commit classic newbie mistakes.

So, what’s keeping traders like you and me from seeing a breakout or trend reversal as it happens?

Here are three possible reasons:

1. You’re too focused on your own trade

In times of heightened market volatility, an average trader tends to concentrate on how many pips he or she can make.

Consistently profitable traders not only focus on their pips, but they also note the event’s impact on the markets in general.

When you believe that a catalyst can propel price action for days, then it’s easier to shift your focus into making good entry and exit strategies.

2. You don’t have a strategy for it

Trend-trading is a classic strategy for a reason. You already know where the price is going, and it works most of the time. But market behavior is not limited to trends.

If you want to maximize each trading opportunity, then you should consider adopting strategies suited for other trading scenarios.

3. You’re stubbornly sticking to your biases

Sometimes, traders don’t see the trend shifts because the markets are just plain unpredictable.

More often though, it’s because they’re actually on the other side of the trade and they REFUSE to see the changes right under their nose.

Remember that having biases is not a bad thing but clinging to your biases – despite all evidence against it – could spell trouble for your trading account.

Luckily, as with other habits, spotting breakouts and trend reversals can be learned.

You can start by keeping updated with the latest market news. This is so you could get a better feel of the catalysts that could influence forex price action.

Making plan B’s of your trades is also a good way to promote flexibility in your execution. Consider alternate scenarios for your trades.

In a market where every pip counts, missing out on breakout or trend-reversal trades could draw the line between profit and loss and could take its toll on your trading confidence.