Become a Better Trader by Avoiding Breakouts | Binary Options


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Breakouts are killers for binary options traders. So how can you know if you’re in a breakout? I’m going to answer that in this video. My name is Jason. Welcome to the channel


Few months ago. We got a really good question from somebody on our YouTube channel You can see here from Logoshop6872 says, “Hey David, how can you identify when the currency is on a breakout so you don’t get trapped chasing it? Also, how would you be able to tell when the breakout currency is ready to reverse?” And this is a really good question. It’s addressed to David. I’m going to go ahead and answer this. I hope that’s okay for you, Logoshop6872. I assume what you really are just after is an answer. And so I’m going to talk about this. How can you know if you are in a breakout? And how can you know if it’s ready to reverse? And that’s a really it’s a very important question because I think all of us have experienced times when when we’ve had some great great trading for a day or several days or even a couple weeks and all sudden we get caught in a breakout and end up blowing our accounts. And that’s that’s got to stop. So I’m going to actually show you right now and stay all the way through the end of the video because there’s always little tips and little tricks that I talk about kind of throughout the video. And you don’t want to miss any of those because it’s those little tiny things that make a significant difference. So I’m going to share my screen here. And you can see this picture of the euro against the Australian dollar. I’m showing on a one hour chart. How can you know that we’re in a breakout? And here, we can see we’re clearly in a breakout but how can you know that? It has a lot to do with the way the price is leading up to that. Now this is only one bar and so you might think oh great well it’s only one bar and it’s gone for a long time so I’m going to get in and go the other way and I’m going to make money as this thing begins to drop but I’m going to tell you don’t do that because we’re in a breakout and how do I know that? Well there are a few elements that are all coming together here to demonstrate that we’re going to break out and first of all I’m just going to bring a rectangle here and if we look here we can see these different levels of support and I’m going to just keep on drawing some some some rectangles here and you’re going to notice a pattern. You’re going to notice something that begins to happen. It’s very, very interesting. Look at the vertical distance of these rectangles. You can see that over time they actually get smaller until you get a very, very small rectangle down here. That is a way of demonstrating slowing momentum. You may have actually seen me talk about slowing momentum in a previous video where you start getting this curving coming around and that slowing momentum demonstrates that the movement going downward here in this chart it’s it’s slowing down and if we were to even get down to a smaller time frame let’s say a five minute time frame and we’re going to back up look at that you very clearly see this curving type action happening here and that’s demonstrating that the that the the momentum pushing this chart this price downward is slowing down, which means there’s a high likelihood of beginning to have a trend change. And remember a trend change does not necessarily mean a trend reversal. Watch another video to see what’s going there. What I mean by that. So, so come back here to the one hour chart and then the price comes back down. And where it comes down is very important. Look what it does here. We have slowing momentum. It comes up and makes a resistance, comes back down and creates either a double bottom or in this case a higher low. You see that higher low that’s going on here and remember what the anatomy of an uptrend is. Anatomy of an uptrend is you have higher highs and higher lows. That’s what an uptrend is. You have a series of higher highs and you have a series of lower lows. That’s what makes an uptrend. So in order for something to go from being a downtrend into an uptrend, you need to start having higher lows, which we have here now and that means that the likelihood of it starting to make a higher high increases. There’s a much higher chance now that we’re going to get a higher high because now we’ve gotten a higher low. It doesn’t guarantee that we’re going to get a higher high but there is now a chance that we will. And so so we get this slowing momentum comes up and creates this higher low so you want to be really really careful what’s going to happen you want to be really careful with that resistance level there and you see this type of action all of the time your homework assignment right now is after this video is to go through and look at I don’t know 20 different charts on different time frames and first of all see if you can recognize this slowing momentum action. And then after you recognize that slowing momentum action see if you can recognize where it goes up and it makes resistance comes down and creates a higher low or the other way around it creates a support and it goes up and creates a lower high and then see what begins to happen when it gets to that resistance, that supported resistance level. You’re gonna start having your eyes open to something and here we see a very, very clear move through that. So that’s how you can start seeing if there’s going to be a breakout. It doesn’t guarantee there’s a breakout but it’s how you can start seeing if there’s a breakout. That’s slowing momentum and it creates a higher low and then you can see it oftentimes breaking through a resistance or the other way around you get slowing momentum you get a lower high and then it breaks through a support very very common all right the other half of this question is how can you know when a breakout currency is beginning to reverse well first of all you don’t and secondly you want to be very aware of like why do you want to get into that trade there’s no reason to get into a trade if a trade has started breaking out your best bet is to stay away from that trade until things settle down don’t try and be one of the first people to jump on that trade and and and try and catch that reversal it will hurt you a lot if you decide you still want to get into a trade then what you want to look at is you want to look for very obvious in this case resistance levels and see if those levels will produce for you the result that you’re after. But with that you have to be aware and you have to be careful that you and realize you are in a breakout. You are to try and and and turn that thing around is like trying to get in front of a train that’s moving and push it hard enough and get the train to go the other way. It’s a very, very difficult thing to do. It’s not impossible. It’s maybe not as good of an example as pushing the train the other way, but you want to be really aware of what you’re doing. The best thing you can do is recognize when you might be getting a breakout and completely stay away from that altogether. There’s no reason to get into that trade. There are thousands of trading opportunities every single day so there’s no reason to get into a less than optimal trading opportunity. In fact I don’t even consider that an opportunity. It’s not a trading opportunity. There’s no reason to get into that trade at all. So stay away from that and just find really high quality support and resistance trades that aren’t showing the risk of a breakout and you’ll be far better off. Okay great I’m looking forward to seeing you in the trading room. Let’s get together, trade together every single day. We go into all this stuff, take even deeper dives. So come on into the trading room, and let’s have some fun and make some money together. room, and let’s have some fun and make some money together.


Alright, have a good day. Bye.