Many traders spend a lot of time looking for potential breakout situations when trading the forex markets. So to trade this breakout you ideally want to wait for a period where the outer lines of the Bollinger Bands indicator have narrowed because this indicates a period of tight consolidation. Finally you can use a price-based system to trade breakouts. The simplest systems involve waiting until the price has started trading in a very narrow range, and then taking a position when the price breaks out of this range.
Many traders spend a lot of time looking for potential breakout situations when trading the forex markets. This is because when these breakouts occur, they very often yield a lot of points. So bearing that in mind, in this article I will discuss three simple trading strategies designed to catch these breakouts.The first method makes use of Bollinger Bands. This technical indicator is very useful in displaying areas of support and resistance, which is marked by the two outer lines of the Bollinger Band range. Therefore when one of these outer limits is breached, you very often get a breakout in the same direction
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