I decided to start this thread to discuss a concept I have been looking at for a while. I do not have a lot of time to sit in front of the computer to trade and I find out the more I sit the more I become Subjective so I tried to find a way to spend less time and be more Objective.
A simple smart breakout strategy taking into consideration price action and swings. The idea is that price would react to the daily range in 4 ways:
Break the high —> possibly a WINNER
Break the low —> possibly a WINNER
Does not break either (inside bar) —> NO TRADE
Break both (outside bar - engulfing pattern) —> possibly a loosing trade unless played well.
The idea is to find a percentage or certain pip range to take profit at and move on. The system is based on gaining small pips a day on a regular basis (80%) and minimizing the losers (20%).
This works in pairs that post large daily ranges. It can get tricky when there is consolidation but you can then trade the channel breakout.
Hello!
Just stopping by quickly to tell you that I will be posting some setups I have seen/currently trading later today. I love tading breakouts because (for me anyways) they are a ‘place order and forget’ kind of method.
Anyways, just wanted to let you know ill be posting at some point.
kimonz, i am a fan of the day breakout consideration. i had observed that when there is a prior day break, prices seem to continue moving for some time and, more often than not, close higher/lower in the direction of the break. my thread, daybreak, takes a prior day breakout and carries it to eod with a wide stop and was designed to be a “set it and forget it” method. it shows to be profitable, but when those stops are hit, it hurts and could result in some serious drawdown. i like your idea of seeing if it can get to a tp before a sl.
though this sounds simple to program, i lack the skills. i end up doing what i can with a spreadsheet and there are certain limitations. i did a quick check of gbp/jpy (you said “large daily ranges”) from 1-07 through 6-12. using daily bars, i can only ask this: if the high of yesterday is broken, what is the difference between that entry point (high of yesterday + .01) and the high of today? be sure you notice what is missing here. we can’t tell if price moved directly on toward that high or if it retraced enough to take out our stop loss before moving on. this leaves me with no clue what kind of sl we would need to allow these trades to go on to tp. we could always spot check some 15" bars to see what came first, the sl or the tp.
however, considering the spreadsheet limitation, there were 755 long breaks in that test period.
the average difference between entry point and high was +95.
634 times the difference between entry point and high was +15 or better,
598 times it was +20 or better,
569 times it was +25 or better,
536 times it was +30 or better.
looking at things through the eyes of a spreadsheet is so limited. but, i think your idea may have merit and wanted to offer this as encouragement for you to look into it further.
The thing about a breakout system is that you need to get an overall sense of the trend before taking a trade. Often, you’ll get a breakout but then some news or other event will cause the prices to drop like a rock and hit your wide stop loss (this can be a major problem if you’re a swing or position trader).
They say that price is everything in a candlestick breakout, and that’s partially true. The next element is trend.
I usually look at Bollinger Bands + ATR + S&R if and when I trade a breakout system based on the EOD or daily charts. I’m still trying to tweak it so that I limit the trades I take rather than go for every trade.
Pipwoof… You may be interested in the trading platform “FXOne” … You can use it to create EA’s and run automated strategies based entirely out of an Excel like spreadsheet engine… No special programing language… Just excel functions. I use it extensively… It’s also a free resource
I trade the breakout of the end of the first hour bar of the London Open…I might open a new thread about it, as it is simple, but takes lots of explanation. It had two trades almost every day of July, with only 3 losses…very good win rate. Today had second loss of this month, but other trade already hit TP. E\U pair only.
I have been very busy yesterday and just checked the thread now. Thank you all for your contribution, it looks like it will be a great thread.
@pipwoof: You are on the right track. Try and convert your numbers to a % of the total breakout days this will give you an idea of the success rate you may be able to get. How do you setup your stop loss … I wonder if it is too close and that is why it is hit. Price almost always retraces on a daily basis under normal conditions and you should factor that in. Have you tried to study other pairs?
Keep it up you are heading in the right direction. Share your research and I will be happy to help.
@NewNine: I agree with you. You need to have a good understanding of price action and candle stick patterns and S/R to. Combine it with the breakout strategy. I have been trading for few years now and learnt the hard way that if you ignore these you will not reach anywhere. However I do not use other indicators. Simply an understanding of these concepts with a breakout strategy is more than enough to be successful.
@sandybeach: How is your strategy going? Can you let us know win / loss ration?
@pipcompounder: Interesting that you are playing the EUR/USD .
Keep the postings coming guys … Have a great weekend…
The Win/Loss rate is something like 1 Loss for every 4/5 Wins, but from what i can tell you will get one loss a week and at least 2 wins, normally 3. It won’t make huge amounts of pips, but it seems reliable to make a good few pips, but because of the Lauer indicating repainting, when you look back on past charts it looks too good to be true, but i am still testing it.
If you want i’ll setup a new thread with the details of it if your interested and post the link here, let me know.
I go with TP of 20 pips, SL of 40 pips, so end of the week i’ll get about 20 pips profit, sometimes you have to close trades manually depending on how the market goes.
Seems to work well, but needs to be tested further though. I don’t always have a breakout everyday, but from mon - fri your get about 3/4 breakouts, 1 - 0 losses and 2-3 wins, hitting TP/SL, so it works out, but not a huge earner, hence why i am testing it and it could do better.
Having a set target profit amount is very reasonable as you need to leave some on the table for others but It seems to me that your issue could be having a fixed SL pip amount. Try and modify this to be the last pivot and see if you will hit the SL less often. Do some back testing and let me know if it changes anything for you. Happy trading.
I am not a programmer however i am trading manually with the most simple strategy, I have been trading since 2006 however the system i am trading now is only for the past two months and the results have been really amazing.
If someone could make a robot that can do the following autmatically I think the results will be amazing.
Its such a simple system it can be explained in just a few points below.
Long positions:
Enter long on the 200 SMA if price comes from below the 200 SMA and passes through. Enter long for TP 15 pips stop loss 2 pips below the 200SMa Price will re-test the 200 enter long again on the bounce from the 200 SMA However this will be the long period trade as your at the begining of the trend. once price is 40 pips profit move S/L to 10 pips above your entry. Time frame one hour only for SMA to be valid. I posted a chart. After the first Fib retracement is over the move up SL to the Lower Fib Market ret leval. The trade will run for anything from 1 day to a week. Constantly in profit as your entry is before the trend started.
For short pos same as above just the opposite.
Rule: Long positions only when price is above 200 and short when below, however sometimes against when 1 2 3 set up is to clear. I dont own this way of trading, it was on a post from someone else, however it works so well.
So the key is to scan the majors and find those nearing the 200 SMA for entries.
