Advanced system #5 (Trend Lines Breakout System)

If you want to synchronize with my trading, then you'd need to recalculate timing.

Alpari UK trading platform runs according to GMT+1 time zone.
My screen shot to the strategy is from Oanda FXTrade. Trading platform sever time there is Eastern Standard time (EST). The midnight candle on the screenshot is the first candle.

EST = GMT-5
Thus, for Alpari we have +6 hours difference.
At Alpari platform when midnight candle appears you need to wait for additional 6 hours and at 6am Alpari UK server time start applying the strategy.

Regards,
Edward

HI EDWARD,
I REALLY APPRECIATE YOUR UNBELIEVABLE COMMITMENT IN THIS GREEDY ENVIRONMENT.

MY QUESTIONS ABOUT THIS GREAT STRATEGY IS MAY BE A VERY RARE CASE. WHAT IF THE TREND LINE IS ALREADY BROKEN WHEN DRAWING IT. WOULD YOU CONSIDER AN ENTRY IN THAT DIRECTION? AND WHAT IF THAT CANDLE BREAKS THE TWO TREND LINES.

THE SECOND CASE SEEMS LOGICALLY IMPOSSIBLE BECAUSE FIRST BREACH SHOULD HAVE INITIATED ENTRY, BUT THE POINT IS THAT AT THE TIME OF FIRST BREACH OF DOWN TREND LINE THAT LINE WAS STILL AN IMAGINARY ONE. THE CANDLE IN QUESTION HAD TO CLOSE FOR TO MAKE IT ACTUAL. AND IT DID BUT BREAKING THE UPTREND LINE.SO IN THIS CASE WOULD YOU CONSIDER AN ENTRY, AND WHAT DIRECTION?

AND MY THIRD AND LAST QUESTION-IN THE ABOVE CASE PP APPEARS TO BE A RESISTANCE LINE. ARE YOU GOING TO TAKE IT INTO CONSIDERATION FOR YOUR ENTRY AND IF YES HOW?
THANK YOU FOR YOUR GREAT WORK AND ALL THE BEST TO YOU AND YOUR FAMILY!
TANER

Good questions, Taner.

Needed to read you questions several times before I could answer :) You are probably trying to code a system, aren't you?
I'll do my best to answer your question.

1. If a trend line is already broken, this should probably be the case only if you missed the moment when it was broken. Because, when we draw trendlines there is no chance of them being already crossed by any price bar.
Remember, that we don't necessarily need to wait for all 5 candles in order to draw trendlines (this is a common mistake among traders), instead we draw a line as soon as we see an opportunity, and then we are ready to enter immediately.
If you missed the moment of entry, try not to chase it, wait for next day opportunity.

If a candle breaks two trend lines, your first order will trigger the stop and your second order will be open. If trading the second order also results in a stop loss being hit, no more entries are attempted that day.

2. If a candle that was going to confirm (and did so) the
Swing Low at the same time breached the upper trend line, we immediately go Long.

Now, if you call a trend line "imaginary", it means there is no valid setup yet to confirm drawing it. Thus, you cannot base any trading decisions on it.
As far as I understand it, if a candle that was supposed to confirm a valid swing low breaks your imaginary downtrend line, it no longer falls under the "swing Low rules" and fails to validate this swing low. Thus we have no ground to draw a downtrend line and enter Short.

Let me know if I missed the point, but better in this case send a screeshot we can discuss.

3. The pivot point indeed serves as resistance. In the original strategy screenshot you may notice that it lies very close to the breakout point. So, a logical and a bit more conservative way to use Pivot point in similar cases is to set an entry respecting the Pivot line: in our case - just below the pivot.
In my trading there is no other use of the pivot point
for current strategy setup.

Kind regards,
Edward

Edward,

This is my initial post, so thanks for the great site are in order first .......

I think that what Taner wanted to point out above with his comment "WHAT IF THE TREND LINE IS ALREADY BROKEN WHEN DRAWING IT." was the case when we have a very steep trendline; the candle to the right from the i.e. swing low confirms the swing by ending just a few pips higher and when at the top of the hour a new candle appears (remember very steep trendline) the price is below the trendline immediately.

An example for this would be euro/jen cross on Dec. 4th, when the closing price for the 1 a.m. candle at 117,67 is above the trendline and the openning price of the 2 a.m. candle is below it.

I personally played it and it turned out fine, but as you have traded this strategy longer than me, i would like to hear your thoughts.

Tomaz

Hi Tomaz,
Thank you for detailed explanation and example. Now I see what happened: we had a candle immediately below the trend line the moment we finished drawing this trendline.

I haven't traded this pair at that time. If I did, then I would be filled Short.
That's a nice trading setup actually, although requires immediate reaction.
It would be not a limit order obviously, but a market order instead, since trading opportunity was already present.

Regards,
Edward

Edward,

If the fifth candle is the first confirmed swing i.e. low, do we consider it a signal? (gbp/usd today).
I ask, as we have to wait till the sixth candle is finished first in order to get a signal. Is that how you play it?

thanks for the answer

Tomaz

Hi Tomaz,

Yes, candle #5 caught my attention today also because of its appearance. Since it falls under 5 candle count I waited for a confirmation (6th candle) and drew my trend line.

A discussed screenshot for traders:

Regards,
Edward

hi edward,i'm jose from spain,thanks for all your job about forex,it's very important for people like me who aren't professional,i have a little problem with this system,the time,i'm not sure if i'm selecting the candles correct,if i'm not wrong 00:00 to 04:00 am Est is 06:00 ma to 10:00 am spain hour,so the time from 06:00 to 06:59 Am in my program is the 07:00 candle in 1 hour time frame,07:01 to 07:59 is 08:00 candle.....like this to finish,but i'm not sure if the correct candles are 07:00 to 11:00 or 06:00 to 10:00
Can you help me please?