hi to all,
new london breakout; in at 1.61417, t/p 1.62221, s/l 1.61088. 80 pips Ta!!
it works, its good
dave
knotthead,
Many thanks for the confirmationā¦very clear! I assume the 9AM candle close is a 1 hour candle? I will try your approach tonightā¦
Best regards!
Bob in Wiscinsin
Bob.
Yep. The system specifies using the 1 hour candle to determine the trend. If you use your charting software and look back at the past few months of data, youāll see that almost every time the 8AM candle broke out within the first three hours, it trends in that direction. Itās pretty interesting and so far so good for me using this in a demo account. We should all thank Nutrader for submitting this and buy him a beverage of his choice!
Good luck tomorrow! Iāll be up bright and early here on the East Coast of the US, continuing to test this.
If the 9AM candle fails to close in a breakout, do you wait for any subsequent hourly candles to close as well? For example, the 9AM candle breaks past the 8AM candle high or low, but does not close outside the 8-9AM āboxā. Do you wait to see if the 10AM candle closes outside the box? 11AM candle? How many candles would you considerā¦3?
Or do you simply not trade that day, if the 9-10 AM candle fails to close outside the box?
Thanks, again!
Bobkat.
Nutrader specified that the length of the entire 8AM candle is what you base the trend on (if there is one). If the 9AM, 10AM or 11AM candle closes outside of the 8AM candle then run with that trend. If there is no breakout in the first 3 hours, then there is no trading for the day. So, I get up just before the close of the 9AM candle to see if it indeed closes outside of the 8AM candle. If it doesnāt then you have to watch the closings of the next two. I made the rookie mistake of seeing the 9AM candle shoot by the top of the 8AM candle (before the 9AM candle closed) and I took a long position. It reversed and the 9AM candle did not close higher than the 8AM candleā¦but in fact during the 10AM it ran the other way and I lost 120 pips. This was because I went back to bed after my false confirmation.
So, in agreement with Nutrader, wait for the 9, 10 or 11AM candle to close outside of the 8AM candle range. Then pull the trigger for a nice run.
Nutrader warned that if the 8AM candle is REALLY long, be careful. Also in my recent experience, the run lasts for about 2 hours and then tends to reverse for a bit before picking back up again a little.
Happy Pip hunting!
hi knot
i seem to recall that the OP said 'on the first break of the high or the low enter the tradeā
thats what iāve been doing, so far so good, not been waiting for 9am to finish
regards
dave
Hi all, hope your trading is going well.
Knotthead you have tweaked the system slightly but probably not in a bad way & that demonstrates exactly why these threads are a great way for traders to bounce ideaās back & forth. My original backtesting was to jump in as soon as the break of the 8am candle takes place but i see you are waiting for the 9, 10 or 11am candle to close for a confirmation of trend. I think this could be a good idea but like everything it is a case of trial & error. & it is fundamentally down to what each individual trader is comfortable with & depends on how much time the trader has to check on price movement. The original idea was a set it & forget it strategy but i think in any such method there will always be plenty of room for improvement & if you are able to, managing the trade, should bring pips in most days, as knotthead seems to be demonstrating
However i think the key to finding the best way to trade or tweak this is by backtesting through a few years to look for the most consistently profitable parameters
Manually backtesting a few years of data takes soo long, i have started going back through my data to check what impact the spread factor has, & so far i have found that it does turn a few of the winning trades into losses, so be carefull out there if anyone is using real money.
I have an excellent backtesting module on my charting package which can test a system like this through many years of data & will even work out the optimum factors of the trade ie SL, PT, entry level etc. The only problem is that i do not know how to code. I have been reading the on line manuals but it hasnt clicked yet. The package is prorealtime if anyone knows coding for this it would be a great help for all of us
Good luck to you all
Dave.
Yeah, I think you are right. Unfortunately that burned me a couple of times. Well, that coupled with the fact that I didnāt put in my SL right away. If it is working for youā¦donāt fix it! 
Nutrader.
Thanks for the update! Yeah, I think I have tweaked it to fit my comfort level a bit. Granted I am still demo trading and will continue to test and monitor this for the next month or so. After that Iāll look back at my trade journal and see what worked or not. I know that by jumping in a little later I am missing out on some pips. I may try the āas soon as the 9AM candle breaks above/belowā entry next week. The entry was the only thing i was having trouble with (see earlier posts) and so I was trying to get a stronger confirmation of the daily trend. I suppose I should trade with the first breakout in one demo account and the start of the next breakout candle in another demo and compare the two (setting everything else up the same so as to have fewer variables).
Again, Thanks Nutrader for sharing this system. Hopefully, whether we get in early or after a strong confirmationā¦weāll all profit!
Iām in today (short) at 1.6190. SL is at 1.6265 and TP is set at 1.6115
knotthead and nutrader,
I like the idea of using the H1 candle close to determine a true breakout rather than endure false breakouts. However, the downside is that sometimes the H1 breakout candle close combined with the 8AM signal candle total movement is pushing the edge of the average daily range. I have been looking at using either the M30, M15 or M5 candle close as an alternative for a true breakout. Have you looked at those timeframes as an alternative? Obviously the M5 is closer to nutraderās original breakout rule, but offers less protection from false breakouts than the H1 candle close. I have gone back about 3 months and havenāt drawn any firm conclusions as to which time frame is superior to the others.
However, a clear example is todayās trade. Using the H1 candle close would have resulted in a 25 pip loss. Use of nutraderās simple lower boundary break or the M5 candle close resulted in a 25 pip winner (using 1X box size).
With a shorter timeframe for a candle close, we can go to bed earlier! Also, since the average price excursion is normally less than an H1 candle, we could pump up the TP from 1X to something like 1.25X or greater. More losses, probablyā¦but larger wins. Likely a more profitable approach? This strategy requires more testingā¦
Your opinions are valuedā¦ :60:
Great Trading!
Bobkat
Hi nutrader thanks for this simple system. I am generally a swing trader following the ICT thread but am looking for extra opportunities in a trending market. If I donāt see a retracement from a recent high or low during London open I donāt have a trading opportunity, until now.
Iāve been looking at a couple of tweeks. First Iām considering using 75% of the candles lenght for my S/L if it is more than 50 pips, still keeping my risk per trade at 1%. Secondly on big news days Iām only setting the pending orders just prior to the news realease, i.e 9.28 BST and only if price is still within the boundary of the 8am candle. Was caught out last week with a trigger and fast reversal at the news. Lots of tweeking to be played with I think but I like the bones of this system, nice one.
Bobkat.
You may be on to something there. By using the 10m or 15m and comparing it to the 1H this may give you a more solidified confirmation before the close of the 9AM break out candle. I will look into this.
Jaroon.
Welcome! Nice post. It seems this would be a nice system to tweak in order to use it for swing trades.
Today, it was a fast moving morning. Anyone else catch that locomotive of red bars like I did? As Bobkat and Dave suggested, I did not wait for the 9AM candle to closeā¦and Iām really glad I didnāt. I hit a 52 pip TP in about 45 seconds after placing my short order. Looking at the chart, if I would have waited until the close of the 9AM candle I still would have made some pips but not nearly what I made by jumping in after the 9AM broke the 8AM before it closed.
On a side note, and no one here has brought this up, I didnāt hit my SL or TP from my position yesterday so, after looking at the charts and looking at related newsā¦I doubled my position and averaged up (I had shorted). Some folks are really against this while others bank on it. I kept my original SL and TPs in place and put those same barriers on my new position. Neither the SL or TPs were hit on these until this morning when the short trend I was hoping for came to fruition and those two positions plus the new one I jumped in on after the break out confirmation meant that I had three positions open of equal value (with different entry points) following the confirmed trend. As a result, I banked a total of +209 pips this morning.
So, it worked out very well and I had my SLs in just in case anyway. My total position % was just over 2%. However, with the specifics of the London Break Out system should I have A) held my position(s) from the day before and B) doubled my position yesterday to begin with?
I guess it is a question of comfort regarding the carrying of a position until the next morning. I had my SL and TP set, so if there was a lot of movement one of them would have been triggered. The other reason I did this is because my average position was pretty much halfway between my SL and TP targets. If this AM the trend would have shown to be going in the opposite direction I would have closed my positions from yesterday taking a loss less than my original SL and jumped on the new trend with a new position.
Any thoughts on doubling and/or carrying over until the next day?
+209 pips for Tues/Wed and +51 for Monday!
some interesting ideaās put forward by bob & Jaroon, both of which are well worth looking closer at.
Jaroon I am sure news plays a role in this strategy but to what extent, the back testing obviously doesnt tell us, todays example shows us how the news release kickstarted the trend which went on to reach full TP, but whether news days are good or bad days to trade this, i am keen to discover
Knotthead, the oriiginal method closes the trade at 0859 London time the following morning before setting up the new days trades if TP or SL has not been reached. Your approach of staying & doubling up was a much more aggresive one which i would not of been able to stomach very easily but i am glad it worked out for you
Nutrader.
Agreed. I would not have been able to stomach it either had it been real money. I am still demo-ingā¦but doubling a position isnāt something I will be doing again. I am taking notes on what my profit/loss would have been if I indeed closed out at 8:59. It wouldnāt have been terrible and my TP day today would have more than covered it. My philosophy on the carry was that my TPs and SLs were set and price was hovering just around the middle of my TP/SL rangeā¦so in theory, whether it was 5:59AM or 9:59AM, I still would have hit my barriers. And, if time allowed, I could watch the 9AM candle and see if SL was probably going to happen or not and close out anyway. This would just require āwatching itā a bit more closely than the buy/sell it and walk away.
Anywayā¦sticking to the original system. It seems to work fine without me mucking with it
Hi nutrader, i am new here here and i felt excited when i came in to your thread .
So i looked up all the details in may data. Based on your original rules, i find that we would had many stops. May 12, 13, 16,17,19, 20, 26,27, and 30 were all stopped. I am wonder if you got the same result or if i got the wrong data candle.
hoyt,
Your specified dates are cherry-picked for the worst performance during the month of May. Since there are many ways to trade this strategy, I looked at using the H1 candle close offered by knotthead. Using the box size for both SL and TP and the H1 filter, those trade dates were only net -14 pips. If you factor the other 9 valid trades for the month of May, 2010, the net gain is +244 pips.
Worth trading? You betcha!
Good trading,
Bobkat
Hello Hoyt
yes i think all of the days you mentioned + a few more during the month of may posted losses.
Going by the mechanical set it & forget it method as layed down at the begining of this thread, May would of ended with just a 2% gain. Agreed doesnt sound like much, but sticking to the correct money management of 1% risk per trade, a 2% gain each month adds up to a 27% gain for 1 year or a 230% gain over 5 years which is not bad for 10mins work a day
But with any mechanical method there will be bad & good months, May was neither of those.
There is plenty of room for more testing, tweeking & backtesting but i think we have the bones for at least a low risk but consistent strategy.
Also, as some of the guys on here are showing you can take this method & make it your own, & with a more aggressive
approach, most days can bring pips
hi nutrader, i totally agree with you and glad to find out your effort. I found some guys using it to trade on eur and also on different time frame. I have not done any back tested yet. I will try to carry on in this weekend and hope we can get some tweaks soon.
On average, 27% per year is really not bad if it is really workable!
hi nutrader,
thanks for bringing this idea to the table for all us newbies to have a play at. itās been interesting seeing how others have interpreted it differently and are still getting decent results. The issue about waiting for the 9.00 candle to close is a point in fact; I have been setting it automatically to trip as soon as it breaks either the high ot low, but after last weeks hiccups, I have a look at the news calendar first an if something important is coming out at 9.30, then I wait before I set my entries. (I havenāt worked out yet how to set timers on my entry orders!)
I have also been looking at how setting TP & SL against 1x or 2x the 8.00 range compares, but by adjusting the bid price to maintain a fixed risk %. Iāve just lost today on both approaches, but for this week I am seeing 2% profit on the 2x and 5% on the 1%. (thatās with a 0.75% risk on both). It will be interesting to see how that compares over the coming weeks.
hi bobkat,
thanks for your information, may i know what the h1 filter is. I am really interested in knowing more about this breakout systme. I am looking at how to tweak this system or combine with other indicators to increase the winning odds.
Good morning guys
I found this thread here which I like cause the setup that has been introduced is simple. I did some backtesting in Excel with the 6B GBP/USD future which should not move contrary to Forex. I followed the rules (8am candle/2 x TP - 1 x SL), the only thing I ignored is the rule that the trade must be closed at 7.59 pm at day + 1 in case that the TP/SL was not triggered before. Although this may change the result, I think the influence of these days are not crucial.
The result I found for the time from 02/28, 2011 until 06/24, 2011 was a 63% profitaility rate.
There were 27 winning and 36 losing days, the days mentioned above I did not count. 2,102 ticks + and 1,248 ticks against the trader. I did not take a spread or slippage into account. The excel file I did this backtest with is really ugly, but I found this system as profitable for the 6B.
Within the next few days I will have a look at GBP/USD forex quotes, it is only a matter of copy&paste, but I expect them to be more or less the same. In case that someone is more experienced with Excel then I am he or she could program a spreadsheet and share it. It is really easy if one knows how it works (like trading Forex, guys - ah, I don`t know yet how to trade Forex, but I work on it :64: