One of the most common patterns that you will see on a training chart is the rectangle. The rectangle is essentially a simple consolidation pattern where you have obvious support and resistance. The markets just grind back and forth before making a decision. Because of this obvious pattern, you have the rest of the market noticing these levels as well. That’s the beauty of this strategy: it’s so obvious that other traders are waiting for the same thing. On the attached AUD/NZD daily chart, you can see that the market had found significant resistance at the 1.0550 level, while having significant support at the 1.0375 handle underneath. Traders simply had to wait for a daily close outside of that rectangle to start going long of the market. Tradition dictates that a traitor will put their stop loss half way into the rectangle that was just broken out of, and as you can see your trade would have been protected. The target is quite often the same height as the rectangle, and since you have a stop loss with only half the distance, you have a build in 2 to 1 ratio.

One of the easiest ways to train the financial markets is to go with the trend. By using the Daily Breakout System, this ensures that you should be with the overall momentum of the marketplace, and it gives you an opportunity to profit off the volatile moves. On the attached chart, I have the AUD/JPY currency pair on the one-hour time frame loaded. As you can see, I have dashed lines via the period separators on the chart. Every time one of those lines is crossed, we go into another trading session. The trading system is simple: you take a break out of the previous days close and follow the market. Preferably, you can go with the longer-term trend, but for some traders, they will take the trade either direction. You can see that I have several rectangles on the chart that show when we would have placed the trade. You simply enter a buy order on a break of the previous day’s high price, or a sell order at the previous day’s low price. You then place a stop loss at 50% of the total session range of the previous day, and hold your position. As far as take profit is concerned, typically people will move stop losses every 24 hours. So, for example, on the session that you entered, you would then put the stop loss at 50% of that move after that day is done, and so on. Eventually, the market will knock you out of your position, telling you when to exit.