Simple Breakout Strategies

Trading Systems
1

Hello guys!
I’m new here as you all can see on my number of posts. Firstly I’d like to introduce myself.
I’m from Brazil (btw, is there anyone here from Brazil as well?) and I’m 19. As you will notice, I’m still learning english, so I ask you guys patience with me :slight_smile:
Since last year I started to study financial markets and the forex called my attention. I read some books, among them:
The Disciplined Trader (this one opened my mind) by Mark Douglas
Trading in the Zone by Mark Douglas
The Daily Trading Coach by Brett Steenbarger (excellent one!)
Exceptional Trading by Ruth Roosenvelt
A Trader’s Money Management System by Bennett A. McDowell
Forex Patterns & Probabilities by Ed Ponsi
and I’m finishing the book Trade with Passion and Purpose by Mark Whistler
And I have more 3 books waiting me on my desk (turtle trader, fx bootcamp and a fundamental analysis book from Ashraf La�di)
without mentioning all the stuff I read on the internet.

Well, as you all can see, i have thirst of knowlegde :stuck_out_tongue:

But I just read them, I did nothing else. I mean, sometimes I like to demo trading and nothing more. I think I was fearful to be the 95% of people who lose money on the market, and then I thought I’d have to read a lot before start. If am I right? I don’t know, I hope so.
And now I see it’s time to begin to develop my own trading system. And it’s much harder than I thought!
And this is one of the reasons why I’m here.
Guys, I’d appreciate a lot if you could give me some insights and tips about swing trading strategies.
I want to develop a system based on breakouts, support and resistance. And of course, a simple system. I know the simple ones are the best because they tend to be very robust in the face of ever changing market conditions.

I want to trading the demo for a while and then, just then, go live. I think I’ll start with 1k in a micro account. Surely i don’t intend to become millionaire within 5 years :stuck_out_tongue: First of all, I want to gain experience and feel the market. And then, gradually, I will add the size to take greater profits. Oh yes, with 1k, i have to start with a micro account if i want to trade swing. With the forex volatility i can’t put SL too close from my entry point, I have to give space to the market run. Am I right?

Well, about the trading system, at first I was thinking in put a simple moving average of 150 to recognize trends, and the stochastic to give me orientations of entry. But based on breakouts, support and resistance.
(guys, is stochastic a momentum indicator?)
edit: i forgot to mentioning: daily charts!

I did some backtesting but i don’t know, it didn’t go well.

Guys, humbly I ask your help.

Thank you so much and I wish you the best trades!

(ps. sorry, the post went too far)

2

Hi,like my case i got started in 2006 till now i`m making nothing.Bcoz wit strategy and capital issue.I am 21.I started wit $100 few times trading mini acc not mic-mini that sounds bad and of course i lose it.I have chged system many times i realy dont like doing it.

My mistakes i done i did demo much straight go live and lose it.I hate that.:mad:
I also lack of experiance that time.

But lucky u have 1000k i`m sure u will do ok.Depends on u which systems suite you.But carry on wit ur demo first its very important.But some have grown account from $100 to $10000.realy.For me its a matter of time.

Now i`m trying very hard tweaking my systems back i am sure i cant scalp 1 min even some can do it very well.I guess bigger tf will do better.

Bye.

3

Hi pmarini,

I will try to attempt to put my system in words.
So far, this system has worked well for me. And trading on my account, it is more profitable than most of the other systems I have tried.

The only problem to my system rite now that I am facing, is to put in a reasonable SL to ensure that you can ride the throw backs prior to the completion of the trend that you entered your trade in.

You can use any time period for this method. And it can be used on most of the major 4 currency pairs. I have yet to test it on cross currency pairs though. But it should work as well.

On the chart, set up the following indicators:

  1. Bollinger bands at period 20, sd 2.5 (color the center line Gold)
  2. Bollinger bands at period 20, sd 1.0
  3. ADX 8, DI+ 13, DI- 13
  4. RSI 18 Levels 75, 50, 25

Long Entry Setup MUST include all the following conditions

  • When the candle closes above the gold line
  • RSI crosses above 50
  • ADX slopes upwards to show a trend
  • DI+ above DI-
    (Best if the bollinger bands are opening!)

Short Entry Setup MUST include all the following conditions

  • When the candle closes below the gold line
  • RSI crosses below 50
  • ADX slopes upwards to show a trend
  • DI- above DI+
    (Best if the bollinger bands are opening!)

Exit on either of the following (at the close of the candle)

  • When the ADX upward slope changes direction
  • When the RSI changes direction
  • When the candle closes with >60% body below the sd1.0 line.

Using the above set up, I usually put a SL of 30 pips and a TP of 30 pips as well.

The SL is not the optimum value yet. Cos during my usage of this system in the past month, I get a few pre-mature closing of my trades due to throw backs.

What I did was to achieve more profitable trades, is to adjust my SL and my TP as the trade progresses.
At the beginning, I will set up the SL=30 pips and TP=30 pips.
If the subsequent candle opens above the wick of the previous one, I will move my SL to 1 pip above the last close value, and shift my TP 10 pips up.
(eg, for a long set up, if the previous candle closes at 100 with a wick of 110, and the current candle opens at 112, I will adjust my SL to 101 and shift my TP up 10 pips.)
I will continue to adjust my SL till I reach the point where my SL = my entry price. There after, keep adjusting the TP up 10 pips till the exit condition is met OR till the trade closes at the TP i set.

So far, my max profit from using this system in one single trade is 80 pips on the 5 min chart.

Do give me feedback on this system should you give it a try.
If you can find ways to improve upon the system set up above, I’d be grateful if you share it with me.

Good luck to your trading!

4

Hi,ahgong very confusing i dunno to insert 2.5 deviations in mt4.Should we put it in shift 2.5 (shift 5)Pla attach some img how it looks like.:slight_smile:

5

Hre some addon that i usually use in my trading such as fibs and the 60sma in 15 min get the over all tend.

And also the rule that if price hit yesterday high either bounce to lower or break it.

Or Goes down previous low to break or bounce.

Or from the opening it i`ll do in one direction for the day.

cid-ceb79fffb8048b10.skydrive.live.com/self.aspx/.Public/Attachments/breakout%2015%20min.bmp

And this BB strategy was very similar when i first start trading but it was wit Parabolic Sar.After so long i am back again wit this.I use for scalping.I dont trade bigger frames now but i watch it and see what can i do wit this strategy in Us session.looking Cable and Ej.
:slight_smile:

7

hello mate, good thread

8

Eu tambem falo um pequeno portugues, but your English is miles ahead of my Portuguese.

You seem to be on the right track in your endeavors. I built my own backtesting engine using excel. I’ve tested SR and MA systems on many instruments with data going back as far as 1975. I’ve optimized the parameters, the look-back periods for the SR System and the amount of days that the MA system uses to calculate the average, to use the best values for each instrument. I optimized my entries and exits and my position sizing for best results.

I would highly recommend this process of writing and testing trading rules as it gives you confidence in your system. This makes you more likely to follow it, even when times are bad. The best system in the world is no good if you can’t execute it.

Let me know if you’re interested and I can give you a few tips, or share my experiences as I did this.

9

Hi pmarini and welcome in the Forex world.

Your system is just the begining in few time you will see how many template of your system you will save in your MT4 platform.

My litle advice. Trade live, even in cent. Demo is good, but incomplete if you decide to trade manually, but you are missing the most important part of your strategy : yourself.

Ho yessss. Forex is first a yourself story… then a strategy.