Breakout System X-treme (BSX) System by salt-n-pipper

[B]Breakout System X-treme (BSX) [/B]

[B][U]Concept: [/U][/B]
There are very few things we can be certain of in forex trading, so we have to take advantage of high-probability setups. For example, what usually happens after a long period of consolidation? That’s right – a breakout.

After trading within a range for a long period of time, we can reasonably expect a strong move when price breaks out. The narrower the range, the more violent the breakout. The longer the period of consolidation, the stronger the breakout. This is why I’ve found the BSX (Breakout System X-treme) to be an effective system.

The BSX is a variation of the inside day breakout strategy. For those of you who aren’t familiar with the inside day strategy, it uses the daily chart to spot breakout trades.

Basically, we wait for price to form what I like to call a “Master Candle.” A Master candle is created when price forms at least two succeeding candles whose highs and lows stay within the Master candle’s high and low.

Here’s a visual example of what I’m talking about:

From my experience, USD/JPY and USD/CHF tend to best for this strategy as price on these two pairs can range for long periods of time.

No indicators, no BS, just pure price action on the daily chart.

[U][B]Entry Signals:[/B][/U]
To enter a trade, we must first find the days when price is ranging. To do this, look for candles which are “eaten up” by the big master candle (refer to the picture above).

What you want to look for are formations like this and jump in immediately once a candle breaks below/above the high/low of the MASTER candle.

I repeat, jump in at the break of the MASTER candle! Don’t be overeager and enter on the break of any of those small candles! It’s a fake out more often than not!

I like to set my order 2 pips + spread of the high low. If I’m trading EUR/USD for example and the spread is 1 pip and the high of the master candle is at 1.4000, I will set a buy stop order at 1.4003.

As for my stop, I place it at the middle of the master candle. The profit target is twice the size of your stop. Of course, adjust position sizes accordingly. I risk around 2-5% of my account per trade.

You can change your risk management rules depending on your style

Here are a couple of examples that I found on USD/CHF’s daily chart. The first one was a winning trade while the second one lost.

Here’s the winning trade:

Here’s the losing one:

Any thoughts on this one? I’m still thinking if I should add any indicator to this…

the trend changed on the second chart because of that big spinning top and changed to uptrend so you should have bought on that one.

Interesting strategy, any breakout indy’s for boxes or alerts you use? I have been looking at breakout strats on here and FF, gotta say, ton of indis for breakouts…

Great Strategy. Superb. I suggest rather than adding a indicator trigger to a shorter TF in this case 4 hr chart and wait for Break Out pull back continuation (BPC). Then I suppose we can reduce the chances of fake breakouts
Happy trading

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nice strategy. I will look at past action on usdjpy and usdchf to see how it has fared. Can you enter even after just 2 or 3 days of consolidation?

Can anyone confirm a “master candle” on EUR/CHF? Yes?

Thanks, another tool in my trader toolbox.

surindm, what indicator you suggest? currently im using pure price action. in addition to the rules of the BSX system and looking for master candles, i also move into the 15-min to see how strong the breakout is.


on second thought, i don’t think i’ll use an indicator. the bsx system is good as it is. look at 15-minute for confirmation!

When you trade the breakout you always set two pending orders at the boundaries of the master candle ?
Thank you.

this is a good system. make sure 2:1 risk reward and it should win. needs some testing. it can work on any pair i’m sure

i think simple systems are better. you cant make money with hard system

I asked something else guys ;D. I wanted to know how to set up the market orders following the rules of this strategy.
Thank you, Francesco.

Isn’t it that you would use two stops for at the high and low of the master candle to enter trades? Then you are automatically in the trade once a breakout occurs. Then either leave the other stop or delete it and set it to half the candle size I think…

nice system… momentum is your friend on this one…

exit strategy here is EMA 5; if the candle closes above/under (depending on the direction) I will close my trade

If your interested in a e book on the master candle.Go to the sister site to Baby Pips Review Pips.Go to non automated systems under master candle website it will take you where you can download free e-book.They used to do a weekly video on it i think they trade a couple pairs on either 4 hour or daily.

Nope, no alerts, just orders placed on both sides of the master candle :slight_smile:

Great job spotting this one! I try to avoid using dojis as master candles, but I guess it worked nicely in this case. Have you tried using this strategy?

Sure you can. I usually use at least 3 days :slight_smile:

@Zex4x - Just like what RK1m said, I usually just set orders on both ends of the master candle. Some brokers allow OCO orders: Types of Orders | How Do You Trade Forex? | Learn Forex Trading

point is that i’m using bsx on H1 charts … it seems to give quite a good respons after a lot of paper backtesting …

you can have two take profit methods

method 1 : put SBE on trade after about 20 pips ; take profit on next resistance/support level

method 2 : take profit on +/- 25 pips

does anyone feel secure about these thoughts ?