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Developing a system #17 (19 PIP Breakout)

Submitted by Daniel

This strategy is very similar/based on the numerous breakout strategies already on here. I target two trade times 08.00GMT and 13.00GMT. I look at the previous four hours of trading and find the low/high.

I then create one buy order 3 pips above the hight and one sell order 3 pips below the low. The order is an OCO order so only one trade can take place.

I set the stop at 10 pips and the target at 19 pips.

I have found in testing this that for 08.00GMT the best 2 pairs are AUD/USD and GBP/USD. For 13.00GMT GBP/USD and EUR/USD.

Back testing has shown a winning percentage of around 45-48%. Because the wins are more than the losses this seems to offer a healthy profit. I am demo trading this now but was interested to see and ideas you or other may have about this. One thing I can't put my finger on is why some months are better than others. I have tried to see if ADX, Volatility or Momentum indicators will further increase my winning % but have not been successful.

Thanks

Daniel


http://forex-strategies-revealed.com/


thanks Daniel ! can u attach an excel sheet of your backtests?

no problem, I haven't had much experience with metatrader but write sql for a living so the results are derived from metatrader history data but analysed via sql.
19_Pip_Breakout.xls

Hi Daniel,

Finally I'm here :)
For a good simple strategy like yours there is always one primary thing to do: instead of allowing the price to "choose" which of your orders to hit, you can try to make a choice yourself. What I mean is, you can choose a preferable breakout direction (up or down) beforehand, a direction where you're likely to get higher percentage of being right.

It may sound too simple, but Parabolic SAR with default settings (0.02, 0.2) might be on your side. Before 8:00 am GMT, for example, Parabolic SAR, as a rule, already establishes its trend preferences. So, the only thing you need to do is to follow it. For example, if SAR suggests an uptrend at the moment you set up your trades, then go with a Buy Stop order only and a Stop loss.

This simple approach should increase your winning ratio.

Regards,
Edward

Thanks Edward, I will do a bit of back testing to see how this would have helped me.

Daniel

I was just wondering would you run the sar across an hourly chart or even daily to see the longet term trend?

Just hourly SAR for this strategy.

Regards,
Edward

LET THE SAR DECIDE THE ONE BULL/ONE BEAR TRADE DIRECTION-GREAT IDEA EDWARD :))) I also avoid trading MONDAYS and FRIDAYS as there a NIGHTMARE for breakout systems! With these 2 ideas alone you'll have fewer more successful trades--remember the casino adage: the more you play, the more you pay! Likewise, OVERTRADING is also a painful and silent death :(((

Hi Edward/Daniel,

maybe also possible to use the Pivot line to decide to go Long or Short??? For example if all candles until 8am are above the pivot line than only go long. For short all candles until 8am below pivot line.

another question: is it also possible to use this kind of breakout system to use for the Gold market? Do you know if this is possible?

thanks

Dènis

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