Understanding how to navigate different market conditions is crucial when starting your trading journey. While there's no "secret formula," seasoned traders rely on multiple strategies rather than a single approach. Mastering these early can set a strong foundation for long-term success.
This guide simplifies three essential trading strategies:
- Break and Retest Strategy
Capitalize on trend continuations by identifying flipped support/resistance levels. - Breakout Strategy
Capture volatile moves by trading breaks through key levels with momentum. - Range Strategy
Profit from predictable price oscillations between established boundaries.
Ready to dive in? Let’s explore each strategy in detail.
Break and Retest Strategy
What Is It?
A trend continuation strategy where you enter after price:
- Breaks a support/resistance level
- Retests that level from the opposite side
Key Concept:
- Support becomes resistance (or vice versa) in trends
- Works best in trending markets
👉 Learn how to spot high-probability retests
Why Use This Strategy?
Higher Win Rate
- Identifies "areas of value" where price previously struggled
- Combines breakout trading with trend alignment
Beginner-Friendly
- Simple to identify support/resistance levels
- Builds foundational skills for advanced systems
Profit Potential
- Captures extended trend movements (days/weeks)
How It Works
Resistance Break Example:
- Price breaks resistance → Pulls back to retest
- Former resistance now acts as support
- Enter long on rejection candles (e.g., hammer)
Support Break Example:
- Price breaks support → Retests as new resistance
- Enter short on bearish rejection (e.g., shooting star)
Real Chart Example:
- USD/ZAR 1-hour chart showed a 2.5RR profit after clean retest
Breakout Strategy
What Is It?
Entering trades when price breaches support/resistance with:
- Strong momentum
- Increased volume
Ideal For: Fast-moving markets with volatility.
Why Use This Strategy?
Capture Rapid Moves
- Prices often surge after breaking long-held ranges
Clear Signals
- Easy-to-spot breakout candles (e.g., large bullish candle above resistance)
How It Works
Identify Key Levels:
- Horizontal support/resistance
- Watch for "build-up" (tight consolidation)
Enter on Break:
- Use buy-stop/sell-stop orders
- Confirm with closing price beyond level
Manage Trade:
- Trail stops to lock in profits
- Target previous swing highs/lows
Example:
- GBP/CHF 4-hour breakout yielded 2RR profit
Limitations:
- Fakeouts occur (30% of breakouts fail)
- Late entries risk poor risk-reward
👉 Discover advanced breakout techniques
Range Trading Strategy
What Is It?
Trading predictable bounces between:
- Upper resistance
- Lower support
Best Used In: Non-trending (sideways) markets.
Why Use This Strategy?
Clear Risk/Reward
- Stop loss outside range
- Take profit at opposite boundary
Repeatable Opportunities
- Multiple trades per range possible
How It Works
Identify Range:
- At least two touches at support/resistance
Trade Rejections:
- Buy at support (with bullish candles)
- Sell at resistance (with bearish candles)
Exit Plan:
- Close trades before range breaks
Example:
- AUD/USD 1-hour range provided 3+ profitable trades
Limitations:
- Trades take time to develop
- Premature exits risk missing profits
FAQ Section
Q: Which strategy is best for beginners?
A: The Break and Retest strategy offers clear rules and aligns with trends, making it ideal for new traders.
Q: How do I avoid fakeouts in breakout trading?
A: Wait for candle closes beyond the level and confirm with volume spikes.
Q: Can I combine these strategies?
A: Yes! For example:
- Use range trading in sideways markets
- Switch to breakouts when volatility increases
Key Takeaways
- Break and Retest: Trade trend continuations at flipped levels.
- Breakout: Ride momentum after confirmed breaks.
- Range: Exploit predictable bounces in sideways markets.
Master these strategies to trade confidently in any market condition!
Got questions? Drop them below 👇