Breaker Block Trading Strategy

Breaker Block Trading Strategy:

In this article, I will discuss the Breaker Block Trading Strategy with Real-time Examples. In the smart money trading concept, it is called breaker block trading, and in the price action concept, it is called breakout test. The idea behind a breakout test or breaker block is that if the market can successfully retest the breakout level and continue in the same direction, it confirms the breakout’s validity and suggests that the market will likely continue moving in that direction.

  1. A breaker block strategy or breakout test involves looking for key support or resistance levels on a price chart that may cause a significant change in price direction when broken. When an SR/SD level is breached, it is considered a significant signal that the price may continue to move in that direction.
  2. Then, please wait for the price to return to the breakout level to confirm that it has become a new support or resistance level. Once the level has been confirmed, traders can enter a trade toward the breakout.

Below is the basic idea about breaker block trading or breakout test trading strategy

Breaker Block Trading Strategy with Real-time Examples

Breaker Block Trading Strategy step by step

Step 1: Identify the key support or resistance levels in the range (accumulation/distribution)

Step 2: Watch for a price breakout above or below these levels, signaling a potential trend reversal or continuation.

Step 3: Confirm the breakout by looking at the trading volume and candle to see if the move is supported by market activity.

Step 4: Wait for the price to return to the breakout level and confirm that it has become a new support or resistance level. Look for the price to touch or bounce off the breakout level, indicating that it is holding at a new level of support or resistance.

Step 5: Enter a trade toward the breakout, using stop-loss orders to manage risk. If it was a bullish breakout test or bullish breaker block, enter a long trade and place a stop-loss order below the breakout level and recent swing low.

Step 6: Monitor the trade closely and adjust stop-loss orders or exit the trade if the market moves against your position.

BREAKOUT CONDITION
  • liquidity hunting and break of market structure
  • Valid breakout
  • HIGHEST CLEAN VOLUME OR WIDEST CANDLE (VOLUME SPIKE). The greater the volume and size of the candle, the stronger the breaker block.
  • Should not break and follow through of the breakout candle

U can trade trend continuation or trend reversal. Here is the basic idea behind the valid breaker block entry method

Breaker Block Trading Strategy step by step

Below is an example of a breaker-block trading strategy

An example of Breaker block trading strategy

Breaker Block Trading Strategy with Real-time Examples

Order Block Trading Strategy

The order block strategy identifies areas where significant buying or selling activity has occurred on a price chart. When the price returns to an order block, traders look for confirmation that the level is holding before entering a trade in the same direction as the previous buying or selling activity. 3 types of order block entries. In Order Block Trading, or SMART MONEY MARKET STRUCTURE

  1. SD FLIP
  2. CHoCH
  3. BOS

Step 1: Look for areas on the price chart where significant buying or selling activity has occurred, creating order blocks.

Step 2: Watch for the price to return to the order block area, which can signal a potential trading opportunity.

Step 3: Wait for confirmation that the order block is holding by looking for price action or trading volume.

Step 4: Enter a trade from the previous buying or selling activity, using stop-loss orders to manage risk.

Step 5: Monitor the trade closely and adjust stop-loss orders or exit the trade if the market moves against your position.

Break of Market Structure and Order Block Trading Strategy

Break of Market Structure and Order Block Trading Strategy

Break of Market Structure and Order Block Trading Strategy Smart Money Market Structure Trading Strategy with Examples Breaker Block Trading Strategy with Real-time Examples

Supply Demand Flip and Order block trading strategy

Supply Demand Flip and Order block trading strategy

Change of Character and Order block trading strategy

Change of Character and Order block trading strategy Change of Character and Order block trading strategy

Change of Character and Order block trading strategy

Pullback Trading Strategy:

The pullback strategy involves looking for temporary retracements in the price of an instrument before the price continues to move in its previous direction. Traders look for areas of support or resistance (using any confluence factor) where the price may retrace before continuing in its original direction.

Here are the basic ideas behind the pullback trading strategy

  • After an impulse move formed. wait for any trend continuation Chart Patterns like the flag, pennant, wedge channel, etc

Below is the basic idea behind the confluence of fibo retracement +flip zone with pullback trading

Pullback Trading Strategy

Pullback Trading Strategy Step-By-Step Process

Step 1: Identify the trend of the instrument by analyzing the price chart using the supply-demand zone or market structure. Wait for a valid breakout for trend continuation or trend reversal.

Step 2: Look for areas of support or resistance that the price may retrace before continuing in its original direction.

Step 3: Then look for temporary, weak retracements to any areas of support or resistance (using any confluence factor) where the price may retrace before continuing in its original direction. Wait for the price to pullback to the identified support or resistance level. Confluence zone (Flip zone /sd zone/fibo/trendline/ma/vwap/avwap)

  • Look for continuation chart patterns like flag, pennant, wedge, channel, double top or double bottom, etc.

Step 4: Confirm the retracement zone by looking at price action or trading volume.

Step 5: Enter a trade in the direction of the original trend, using stop-loss orders to manage risk.

Step 6: Monitor the trade closely and adjust stop-loss orders or exit the trade if the market moves against your position.

Pullback Trading Strategy step-by-step Process Pullback Trading Strategy step-by-step Process Pullback Trading Strategy step-by-step Process How to Trade Bull Flag Pattern in Trading Breaker Block Trading Strategy with Real-time Examples

Differences Between Breaker Block Trading, Order Block Trading, and Pullback Trading:

The key difference between these strategies is how they identify potential trading opportunities.

  1. The breaker block strategy focuses on identifying significant support or resistance levels,
  2. Order block strategy focuses on identifying areas where significant buying or selling activity has taken place,
  3. The pullback strategy focuses on identifying temporary retracements in the price of an asset.

Each strategy has its own advantages and disadvantages, and traders should choose the one that best fits their trading style, risk tolerance, and goals. Traders should also understand technical analysis tools and market dynamics to implement these strategies effectively.

Breaker Block Trading Strategy Summary:

The Breaker Block trading strategy is a concept used in technical analysis, primarily in the forex market, though it can also be applied to other financial markets. This strategy identifies and exploits false breakouts or “breakers,” where the price initially breaks significantly but then reverses back.

Key Concepts of the Breaker Block Strategy:

Identification of Key Levels: The first step is identifying significant support and resistance levels. The market has historically shown a reaction at these levels, such as a bounce or a reversal.

The Breaker Block: A breaker block is formed when the price breaks through a key level (support or resistance) but reverses direction. This false breakout creates a new area of support or resistance, known as the “breaker block.”

Trading the Breaker Block:
  • Entry: Traders look for a return to the breaker block after the false breakout. An entry is made when the price revisits this newly formed support or resistance zone.
  • Confirmation: Traders often seek additional confirmation from price action patterns (like candlestick formations) or technical indicators (like moving averages or RSI) before entering a trade.
  • Stop Loss: A stop loss is typically placed outside the breaker block to limit potential losses if the market does not move as anticipated.

Risk Management: As with any trading strategy, managing risk is crucial. This involves setting appropriate stop-loss levels and managing the size of your positions.

Examples:
  • Bullish Breaker: If the price breaks below a support level but rises above it, the area below the broken support can become a bullish breaker block.
  • Bearish Breaker: If the price breaks above a resistance level but falls below it, the area just above the broken resistance can become a bearish breaker block.
Considerations
  • Market Context: The effectiveness of the breaker block strategy can depend on the overall market context, such as trending or range-bound conditions.
  • False Signals: A breaker block can generate false signals like any trading strategy. It’s important to use it in conjunction with other analysis methods for better accuracy.
  • Experience and Skill: This strategy requires a good understanding of market dynamics and experience in reading price charts and patterns.

The Breaker Block trading strategy is popular among traders, focusing on price action and technical analysis. It requires patience for the right setups and discipline to adhere to pre-set entry and exit rules. As with all trading strategies, there’s no guarantee of success, and it’s important to test the strategy in different market conditions and use proper risk management techniques.

In the next article, I will discuss What is Liquidity Hunting or Stop Hunting in Trading with Real-time Examples. In this article, I try to explain the Breaker Block Trading Strategy with Real-time Examples. I hope you enjoy this Breaker Block Trading Strategy article. Please join my Telegram Channel, YouTube Channel, and Facebook Group to learn more and clear your doubts. 

2 thoughts on “Breaker Block Trading Strategy”

  1. Sujit kumar Behera

    Hamari jasi blind trader ki tum God ho sir. Really sir this type valueable lesson ka liya God bless you.

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