I have decided to try my hand with a 5 min breakout strategy that seems to have good back test results.
I will be brief and outline the simple rules.
This is not a mechanical system and I am leaving myself some room for subjectivity.
Look for a consolidation of price usually in the Asian session in a 10-15 pip range lasting over several hours.
Price does [B]not[/B] have to stay contained within this range however it cannot break out more than 15 pips in the trading direction.
Look at the 1h chart and plot a 50 period EMA. If price is above the EMA you only place buy orders and if price is below sell orders.
Entry is 15 pips away from your channel.
Stops are placed 15 pips away from your entry (so at the top of your channel).
Profit targets are 30 pips away from your entry.
Note: The 15 pip stop and 30 pip profit target is for EURUSD and GBPUSD which have an ATR of abt 140 ish over the last 4 weeks, USDJPY is only 96 pips so here I have 10 pip stops and 20 pip profit targets.
I did some back testing for the last 2.5 months in EURUSD, GBPUSD and USDJPY and results were GBPUSD 285 pip profit on 26 trades with a 57% win ratio, EURUSD 375 pip profit on 29 trades with a 62% win ratio and USDJPY 310 pip profit on 29 trades with a 69% win ratio.
Obviously the 2.5 months is not a substantial period of time however for the software I use I cannot go back further on the minor time frames. Sure I could have tested it on other software etc etc but rather just do it live instead as the results were so promising.
I will try to post screenshots of each trade as I take them before they are executed but will not be able to provide any 3rd party verification of results as I use Interactive Brokers.
When I did the back testing I did same on the 15min timeframe as I could not go very far back on the 5min timeframe.
Since it worked on this timeframe I have ended up doing my channel drawings on the 15min timeframe when I make the evaluations.
As I said in the original post I try to have a clear channel of between 10-15 pips.
I draw the horizontal lines from the body of candles.
You can try to go through some of the trades I have posted looking at them from the 15min chart and the lines should make more sense and seem less arbitrary than they do on the 5min timeframe.
Guess I should update the thread to read 15min instead of 5min but oh well.
