Forex trading strategy #7 (Simple breakout System)
Submitted by Edward Revy on June 18, 2007 - 07:12.
The idea behind this simple Forex trading system is to capture an early move of the price when it starts to establish its new direction/trend for the day.
As we know the Frankfurt market opens at 2:00 am EST (which is 7:00 am GMT), then an hour later the other giant - London market opens at 3:00 am EST (which is 8:00 am GMT). The European session is the first major session for each coming day.
So, what do we do?
We start with 1 hour time frame, preferred pair - GBP/USD and no indicators.
The price range we are going to focus on is from 1:00 am EST to 2:00 am EST.
We look for the highest high and the lowest low of the price in that range and simply draw parallel horizontal lines through those extremes that will create a tunnel.
Now we are ready to move to a smaller time frame - 5 minute chart - and watch for the whole 5 min candle to close outside the tunnel which will provide a signal for us to enter with the open of the next candle.
We use a 20 pip stop OR the other side of the tunnel - whichever is less.
We are aiming at at least 20 pips profit. After that we have several options: lock the profit in, start "chasing" the price with a trailing stop by placing the stop just below the lowest low of the previous 5 min candle, or simply exit within the three consecutive hourly candles from the moment the trading order was filled.
Happy Forex trading!
Edward Revy,
http://forex-strategies-revealed.com/
Copyright © Forex Strategies Revealed
Hi, I'm using this strategy on USD/JPY but on M1 chart not on H1. Does anyone knows how can i change the settings on Quantina robot to trade on H1 too?
Hi,
Does it also need to be a bullish bar when buying and bearish bar when selling? Thanks.
Hi,
Would this strategy work for the yen pairs (USDJPY,EURJPY,GBPJPY,AUDJPY) by trading the breakout at the open of the Tokyo session? Thanks.
can anyone elaborate why 1H Tf is used when actual entry is on 5min or 15 min charts.also do i consider the period to watch out as 6-7 GMT or 7-8 GMT
where can i download this indicator
Anyone trading this is simply crazy, another half baked system to go with all the others on this site.
Thought id add my 2 cents. This strat seems good for gbpusd, eurusd and audusd. It can be traded every day in both directions. However if combined with trading with the 4hr trend only the hit rate is higher. For example if the 5 min bar closes below the "channel" and we are in an up trend I simply do not take the trade however if it then reverses quite quickly and closes above the channel I will take the long trade. Remember in trends price is likely to swing back in your favour if you go with it. Profits are greater and losses are fewer :)
Hi Edward,
Is it still working for you this year?
Thanks
Hi Edward i am new to forex, i like your strategy, i live in India and it is GMT +5.30 , so as you mentioned here, EST 2 than in GMT + 5.30 i should look at 12.30 pm candle. am i right.
But i am confused about the change in time zone, i heard that few months london shifts to GMT+1 or 1 hr.. It seems very confusing to me, could you please clear it out for me.
Thanks
Hi Edward,
Regarding using Bollinger Bands to give us a clue on direction of the Breakout, if the 1am EST candle is 1/4 of the way outside the top band (with narrow bollinger bands), in your opinion what would that tell you?
Thanks,
Rockford
Hi Edward,do you have an MT4 EA for this system??
Regards,
Jose Zabaco
greg secker wants a few grand for this strategy, think he calls it "breakfast trade"
"Make sure you are looking at the candle that represents the hour before London open."
I thought it was the hour before the Frankfurt open?
Steve
Hi Edward,
I have something to ask. Maybe I missing something.
During winter (no DST), GMT 7-8 = London 7-8 = London opens.
During summer (DST), GMT 7-8 = London 8-9 = London open for 1 hour.
Should we use GMT or London opening as our constant?
Knowing this might also be useful for different markets openings.
By the way, GREAT JOB.
Nick
Forex strategies revealed.. Keen :)
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