Simple Forex Breakout “Straddle” Strategy

A simple forex breakout strategy used to trade major economic news events and tight trading ranges. How it works? Place two limit orders in the market before the news (if allowed by your forex broker). The first order to buy 3 pips above the consolidation and the second order to sell 3 pips below the consolidation range. Stop losses are placed below the range when buying or above the range when selling.

Let us consider the following euro/dollar example:

forex_straddle_strategy

Consolidation high: 1.2050

Consolidation low: 1.2015

Place an order to buy at 1.2053 with stop loss at 1.2012

Place an order to sell at 1.2012 with stop loss at 1.2053

In the chart above, the sell order was triggered at 1.2012 and the eur/usd tumbled more than 100 pips.

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