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FOREX Fakeout trading strategy

Forex breakouts are one of the most known and respected signals. When price moves in tight range (congestion) it will sooner or later explode up or down.

Cunning forex trader should be ready to exploit those trading opportunities as they often offer one of the best entry points that could be found on the forex market.

However, trading breakouts can be tricky. Market makers are aware of popularity of breakouts. If you can see them, it is likely that others traders can notice them as well. At this point market makers will often pull out interesting move. Fakeout.

Mechanics of fakout in forex

Traders are lured into wrong entry. Stop losses above/under congestion are liquidated. It can also mean that huge trade blocks are placed at price level that fakeout reached, that made it impossible for price to move on. Fakeout on forex will destroy plans of traders who are not properly prepared.

FOREX Fakeout trading strategy

Good news is,that you can also use fakeouts for your benefit. Some say that they are one of the best entry points that can be found on the market.

For the best results, trade with professional ECN/STP broker with MT4. If you can't trade with profit. Automatically copy the traders that are already profitable.

Fakeout forex strategy rules.

Find congestion on the market – price moves in tight range, candles are standing next to each other.

Draw a tunnel. Supports and resistance levels are more like zones, therefore draw them as such. To have better idea about tunnel, you can also switch to line chart.

FOREX Fakeout trading strategy

Wait for fakeout. Fakeout - sudden move outside of tunnel. Price almost immediately returns to the tunnel and closes there. Therefore, wick of the candle (on the breakout side) is very high compared to narrow body of a candle.

FOREX Fakeout trading strategy

We enter immediately after fakeout candle closes, to the direction opposing fakeout.

  • Place stop loss at peak of the fakeout.

  • Take profit: Width of the tunnel + distance between entry and support /resistance opposing fakeout.



“Trading FOREX since 2006. Full time trader and web developer since 2013. My two biggest hobbies are trading and web development. In TheForexKings I managed to connect both of them. Even after 12 years of trading I still have the same passion for the market as at the beginning. The aspect I enjoy the most : development and testing of new ideas.” 


Only in 2016 - 2017 we have created more than 400 forex strategies. During this period we have also developed and published +200 MT4 Expert advisors based on those strategies. We are dedicated to provide you with viable and complete trading systems that have thrived in extensive historical testing. We want to give you complete and transparent trading solutions, that once mastered ,will set you financially free. We want to give you a fighting and winning chance in the market. ” 

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