Breakouts, Continuations, or Reversals?

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Which Is The Best Trading Method? Breakouts, Continuations, or Reversals?

What is the best trading method? I’ve seen many traders ask this question over the past 25 years of working with Forex traders across the globe.

Our answer is always the same; all three strategies can be the best trading method at one time or another! Each method has its place and time; it always depends on the prevailing market circumstances.

I know this may sound a little confusing; however, it’s simpler than you think. 

Reversal Trade

There are times when the markets are oversold or overbought. That particular moment in time presents strong trade possibilities. As a result, we see the trading method called Reversal Trades come into focus. It does not necessarily mean a definite current market trend is reversing. Instead, it means it’s likely due for a pause, and, in turn, a great opportunity is staring us in the eye.

We are well aware that markets do not travel in a straight line and every larger-than-normal market move has an end in sight as the move exhausts. This scenario does not necessarily mean the long-term direction reverses; it may just be a hiatus. However, this hiatus can create a powerful opportunity for a Reversal Trade.

 These Reversal Trade moves are particularly worthwhile. The reversal is usually quick and robust after a sustained movement due to large or institutional traders taking profits. Retail and smaller traders get nervous and follow suit, and volume accelerates until the momentum runs out of gas.

Then What?

Now we look for our next trade opportunity and trading method. Will it be a Breakout or Continuation Trade?

In our next article, we will examine in more depth what trading method may work after a reversal trade. But, again, discipline is essential to trading success.

 We never guess or preempt the market’s next move. The key is to stay with our tested method and strategy and allow the market pattern to show us the next move. 

As always – we don’t just trade for the sake of it. 

“We trade to Win.”

If you still need to get our trades, you can try us out for a no-obligation 14-day trial using the link below.