Advanced system #5 (Trend Lines Breakout System)
Submitted by Edward Revy on June 3, 2007 - 15:20.
Breakout systems like this are always in great demand. It is quick, easy and with a proper use has a true winning rate of over 90%.
Currency pair: GBP/USD, EUR/USD - tested. Other pairs may also be used.
Time frame: 1 hour.
Indicators: none.
Trading setup:
For this Forex system to work properly a trader needs to know the basics of identifying swings high and low, rules of drawing trend lines, plus be able to use Pivot Points.
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Edward,
Let us say that the down trend line was broken and we went long and we reached our target. Then the up trend line was broken at a later point during the day (e.g 9 or 10a.m). Would you suggest that we short the market or just leave it at the first trend line break?
Thanx much
DK
Hi DK,
I consider trading on the break of another trend line only if my first trade resulted in loss. If a profit target is reached within the first breakout, I no longer trade this system for the day.
Regards,
Edward
Hi Edward!
Can we consider the very first candle as a swing high or low. I mean if the 11:00 pm est and the 1:00 am est candles are lower than the 12:00 am candle can we consider that candle as a swing high candle? Or should we identify the swing high only WITHIN the 5 candles?
Mani
Hi Mani,
Sure we can. That's exactly the situation as shown on the picture on the main page for this system.
Happy trading!
Edward.
Dear Edward,
In one of your post for this strategy you said ‘I don't monitor the price, but rather set two orders: Buy Stop and Sell Stop…’
Doing that means that the entry will be at breaking the highest high or lowest low of the first 5 bars of the day rather then braking the trend line (which will be difficult to predict on the beginning of bar number 6). If the entry should be on breaking the trend line then one must monitor the price until the break and only then place the order. Please explain which approach is the correct one.
Thank you for your time.
Ami
Hi Ami,
What I meant is that I watch the price till I'm able to define both up and down trend lines.
Once both trend lines are in place I set limit orders which would be triggered if price goes through any of the trend line. At that point I stop monitoring the charts.
In some rare cases when no orders were triggered and I happen to be around and review my entries I re-adjust the entries to get filled at a better price.
Regards,
Edward
Hi Edward, a little confused, which should be the first stop loss?
Good trades for everyone
Sarah
Barcelona
Hi Sarah,
The first (initial) stop loss is placed 5 pips behind the candle that broke through the trend line and triggered our Entry order.
Regards,
Edward