Advanced system #4 (Early bird Breakout System)

Hello Edward.

First of all, thanks for all the good information you have in your web site.

Ive been testing a strategy called Hans123 which is a breakout system very similar to this one.

Ive changed it a bit to use all the "rules" you have in your system. But Im also using a trailing stop of around 45.

These are the external variables we can set.

extern int Start1=14; //begin of the first session; time adjust by your broker time
extern int Start2=14; //begin of the second session
extern int EOD=24; //time for closing orders at end of day
extern int FridayClosing=23; //broker friday closing time
extern bool FirstSessionOnly=1; //if it equals 1, it trades the first range only (for testing)
extern int Length=5; //length of range for determining high/low
extern int Pips=5; //trigger above/bellow range
extern int StopLoss=50;
extern int BreakEven=35;
extern int TrailingStop=45; //if equals 0, it uses breakeven
extern int TakeProfit=70;
extern double Lots=1;

For some unknown reason the system seems to work really nice for some time and then it starts losing a lot of money

For instance back testing it in 2005 makes it unusable as we would lose all initial money (10.000 dollars).

but if I use it on 2007 it will grow until April 2008 and then start losing money again.

Also, for some reason If I set start time for 10am GMT it get a much worst profit than if I use it on 14pm GMT 0.

When did you develop this system? was it based on analyzes of the current year? or historical data?

Can you share more info about how it was created?

Vlad

Hi Vlad,

The final touch was made in 2007. Back then I simply tested it against historical data. It worked well.
I don't know why it suddenly starts losing money like that.

Rumors have it that when a consistent pattern is spotted (in our case a profitable breakout) by large market movers, they come up with a counter system. I don't know..

The only thing I believe in is that strategies which rely on certain time/specific hours are more prone to changes in performance over the time than other strategies.

Also consider that the number of people trading Forex grows immensely each year. In 2005 there was much less traders trading breakout methods than nowadays.

I'm afraid I don't have any more backups to confirm the results you're getting. Plus you've modified strategy to your own standards. But even then, I still like the concept of the system and believe it can be used as a base, with some tweaks from time to time to keep up with market tendencies.

Kind regards,
Edward

Hello Edward,

I am living in Tokyo and trading during the Tokyo day time. One question here about this system is, the system requires that we need to wait for 5:00 am EST, which is 6pm Tokyo time. However, I found that for the pair GBP/USD and EUR/USD, they began to "breakout" as early as european session starts, that is 2am EST, 3pm Tokyo time.

Why we need to wait until 5:00 am EST? By that time, the breakout usually finished already?
I am still very new to FX, please kindly share your thoughts,
Regards,
Xinquan

Hi Xinquan,

Current strategy suggests using hours according to EST.

Sometimes breakout starts earlier, as you've mentioned.
But oftentimes during the first few hours in the morning price hesitates to choose a trend for the day. It would go up and down and since there is very little traders trading during the early EST hours, there is a very little probability to be on the right side of the trade.
Only by 5am the choice is made to the extent that we can trust a new breakout move.
That's a common pattern observation, nothing more. You can, of course, develop your own approach, my 5 hour candle range is what works for me.

Kind regards,
Edward

Dear Edwards;

I lived in Indonesia - Jakarta can you helped, what time i must used according 00:00 EST to 05:00 EST ? Thanks for your help.

Regards;

Manus168

Hi Manus168,

It'll be from 11am to 4pm your local time.

Regards,
Edward

Thank You Very Much Edward.

Kind Regards;

Manus168

Hi Edward and fellows:

Thank you all and especially Edward and his partners for sharing and giving. Collaboration in open source software industry has been proved its effectiveness, It creates Linuxes, Apaches, Mozilla and many other valuable products. As you all know we all are partners in FOREX not competitors, and this is the beauty of this market which makes people help each other.I am sure 80% of future 20% successful FX Traders will come from this website as It grows ;)

Since the Advanced system #4 (Early bird Breakout System) is a great strategy (although combined with a reasonable money management) I was wondering if some body wrote a kinda indicator or expert to be able to back test this great system in MT4. If yes would you mind sharing it here?

Have a wonderful trade
Kav