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Breakouts are used by traders all over the world, and it is even one of the few trading indicators that any trader can track at any time, which generally greatly increases the chances that other traders will behave similarly in a given situation.
However, the biggest advantage of Breakouts executed on the M1 timeframe is the relatively short time span between entries and exits from trading positions, which is a great liberation for many, especially if they are not yet able to work properly with their trading psyche.
Strategy entry rules
Entering long positions
- Breaking the trend line with a bottom up (candles must close above the trend line)
Entry into short positions
- breaking the trend line from top to bottom (candles must close below the trend line)
On the chart below, you can see a trading session in which both an upward trend line and a downward trend line (flag formation) were formed, with the downward trend line finally breaking through, after which the market continued upwards as expected.
Tip: Since this strategy trades on the M1 time frame, Take-Profits should be placed not too far from the entry position. Stop-Losses, on the other hand, are normally placed below/above the broken trend line (below for long positions, above for shorts)
With breakouts on the M1 timeframe, it is possible to achieve a success rate of up to 80% and, in addition, trades in this strategy usually last in the order of a few minutes to a few hours, which is also a very positive factor in terms of psychology.
