We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Oil - US Crude
Bearish
Bitcoin
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Indices Update: As of 21:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.01% US 500: 0.01% Germany 30: -0.13% France 40: -0.20% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/kiOU1azgBo
  • RT @PeterMehlos: @JStanleyFX Nobody thoroughly covers more markets & various financial vehicles in an hour than @JStanleyFX. Once again sha…
  • $SPX sits slightly above it's opening level going into the final minutes of the trading day https://t.co/qp73niLrDA
  • RT @LiveSquawk: Trump Advisers Exploring Income-Tax Proposal To Cut Middle-Class Rate To 15% - WP https://t.co/KvqRauKmyf
  • US Dollar Resistance Test: Trade or Fade USD, EUR/USD, AUD/USD https://www.dailyfx.com/forex/fundamental/article/drivers_of_price_action/2019/11/12/us-dollar-resistance-test-usd-trade-or-fade-eurusd-audusd-js55.html
  • White House Advisor Kudlow: - New tax plan will not be released for a few months $SPX
  • $USDCNH surging to session highs following Trump's speech earlier today at NY Eco Club and latest remarks from Kudlow on CNBC stating there will be no tariff adjustment until China deal finalized, though possible tariff rollback would be part of phase one https://t.co/7eRGag1nH6
  • White House Advisor Kudlow: - Trump asked that we look at a tax cut 2.0 $SPX
  • Canadian #Dollar Outlook: $USDCAD Breakout Fizzles- #Loonie Levels - https://t.co/ol2eOI2y6i https://t.co/a8KNyMKy4I
  • White House Advisor Kudlow: - US economy in a 'worker boom' right now $DXY $SPX
Breakouts: How to Stay Away from Some Losing Trades

Breakouts: How to Stay Away from Some Losing Trades

2012-01-23 18:15:00
Jeremy Wagner, CEWA-M, Senior Strategist
Share:

As a trader, I have 3 objectives.

  1. Find winning trades
  2. Stay out of losing trades
  3. Rinse and repeat

A breakout strategy is a technical strategyto help a trader stay away from SOME losing trades. It is important to note you will still have losing trades with a breakout strategy. However, my point here is that with a breakout strategy you can be wrong on the trading idea and be kept away from SOME losing trades which reaches objective of #2 above.

Breakouts: How to Stay Away from Some Losing Trades

On January 11, 2012, I published an article on buying the USDCHF based on a breakout type of strategy. Since the published date of that article, the USDCHF has dropped approximately 250 pips. I was clearly wrong on my trading idea as the exchange rate moved lower rather than higher.

However, since the strategy called for a break above the upper Donchian channel AND since price never did break higher, I was kept out of entering into a losing trade. That is a good example of how I was wrong on the trading idea, but was kept away from a losing trade.

Now with prices much lower than before, the trading idea is still valid. This presents an opportunity to buy the currency pair at a much lower price. To do so, we simply use the upper channel as my entry trigger. The upper channel currently sits at .9524 so our entry order to buy would be at .9525 (1 pip above the upper channel). If prices do not push higher, then I continue to be kept away out a losing trade.

The last piece of the puzzle for a trader is to determine what trade size to place in your account, or how much effective leverage to use. An aggressive trader may utilize effective leverage amounts closer to 10 to 1. More conservative traders my utilize 3 to 1 or less.

To learn more about trading with the Donchian channels and the strategy, join us for a live webinar inside DailyFX Plus at 9pm ET on Wednesday January 25.

DailyFX Plus Live Classroom

---Written by Jeremy Wagner, Lead Trading Instructor, DailyFX Education

To contact Jeremy, email jwagner@dailyfx.com. Follow me on Twitter at @JWagnerFXTrader.

To be added to Jeremy’s e-mail distribution list, send an email with the subject line “Distribution List” to jwagner@dailyfx.com.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.