If you’re an experienced trader in the foreign exchange market, you may realize that sometimes, correct decisions don’t make sense; oddly enough, it’s the incorrect decisions that seem sensible. For instance, in the case that involves breakouts (i.e. trades whose price action breached), although it appears rather impractical to invest in them, risky setups can serve as instruments to profitable positions. The trading strategy that gives light to such a concept is trading with the use of Community Channel Breakouts or the “Do the Right Thing” Strategy.

Here are facts about using Commodity Channel Breakouts:

  1. When relying on the approach, a familiarity with fundamental aspects of breakouts can be a big plus. As it follows, breakouts are defined as trade set-ups that involve monitoring certain price levels yet going below or above expected points; examples include Fibonacci levels, pivots, and support & resistance levels.
  2. The trading technique can reveal your discipline as a trader. Especially since you can be left clueless regarding various market elements, it’s a strategy that lets you consider an exit position easily.
  3. The drawback of the trading strategy is that you can’t control the volume of your trades; it renders you unaware of risks and the value of potential losses. Due to the setback, it’s important to have exceptional risk management skills.
  4. The technique highlights the essence of paying attention to volatility levels; in the presence of minor price movements in a brief period, volatility levels are supposed to be low, and should there be major price movements in a brief period, volatility levels are supposed to be high. If prices remain to exhibit volatile behavior (i.e. abrupt change in direction when exposed to new market elements), it’s advised to anticipate what will or what will not occur.
  5. The technique is responsible for letting a trader generate profits from breakouts confidently; it puts you on the proper portion of a trade based on the movements of breakouts.
  6. When turning to the strategy and insisting on using a short time frame, the idea is to exit a trade once stop orders were set and prices are moving at least twice as fast.
Since it dwells on the logic that volatility is a huge factor, the approach emphasizes the significance of setting stop orders accordingly; granted, momentum can be used effectively for a trader’s advantage.