Forex trading strategy #7 (Simple breakout System)

Edward,

I have a question here. If a breakout doesnt occur for long time, then what should we do? Will the breakout be valid anytime it breaks the channel or only for few hours after London market opens? Thank you for sharing such a wonderful strategy.

Regards,
slngupta

Hi slngupta,

We wait for a breakout as long as it takes to. No time limits, unless you decide to call it a day, which is fine. There are plenty of trading opportunities each day.

Happy trading!
Edward

Done this 12 times on demo, 9 win 3 loss, 20TP/20SL. Going live account next week with small cash

My 9 wins above would all have done at least +25, so may increase TP as it progresses.

Hi Edward,

I only came across your site yesterday and I am very impressed by the weight of trading ideas and the excellent feedback you and your team provide - thank you so much.

I've been back testing the Simple break out strategy (number 16)and was absolutely amazed by the success rate between 17-3-08 and 9-4-08. Using a 50 pip SL or the bottom of the channel (whichever is less) and taking profit at 25 pips, there were 16 winning trades and only 1 losing trade! A cumulative gain of 350 pips which is just fantastic. Many of the trades would have gone on to achieve much higher gains, infact the average was 75 pips per winning trade, so there is probably a case for taking some of the profits early and then just letting the trade run with a trailing SL.

I don't have access to 5 minute chart data before 17/3/08, otherwise I would carry out far more exhaustive testing. From your own experience and what other users have fed back, would you say the results I have seen are representative of what's possible?

I look forward to hearing from you and thank you again for such a brilliant site.

Mike

Mike,

Even I have been using this strategy live since April 17th. I use 20 pip SL and 20 pip TP. Till 31st of April in around 9 to 10 trades, I just had 1 losing trade.

But after April 1st, I had 4 losing trades in 7 days. The reason is many times there is a sudden breakout and spike but as per our strategy we need to wait for atleast 1 candle to completely open and close outside the breakout region. By that time the price is reversing back which caused some losing trades.

Perhaps, if I try with 50pip SL as you did, I should get better results.

Edward, do you think we need to have atleast one candle opened and closed outside the breakout area OR is it enough if a previous candle just closes outside the breakout area for us to enter long/short.

I really thank you once again Edward. I have been using this strategy and the GBP/USD breakout strategy and I made 40% in 15 days till April 1st.

Thanks,
slngupta.

Hi Mike,
hi Slngupta,

You both have very well described the actual performance of the strategy.

Mike, as you have noticed, we benefit from what the market is willing to give us. If the breakout is weak, there is nothing we can do, but when it is strong, we have nice profits.

Slngupta, I would stick to the rules. However, there is one thing you may test. Say, if you want to enter on the first close outside the breakout zone, then set your profit target about 15-20 pips away.

Then add to a position using original rules, BUT only if the first profit target has not been reached yet; if it was you don't enter with another order anticipating a retracement.

Regards,
Edward

Hi Edward

I am extremely grateful for the 'Simple Breakout Strategy' GBP.USD, and to you for making it available here. I've had about 19 consecutive winning days, but within the past 7, breakouts are weak, and the pull-backs have costed me. I gamely accept drawdowns, as I accept that its all part of trading. My question is, pls...

Is there a recognisable cycle or particular behaviour of pairs to this strategy, that can alert us to when its simply best not to trade with it?

Its curious, for a strategy to deliver so consistently, then behave out of 'character'. In your experience how long does this typically last, and how often does it occur within a trading month.

I appreciate any input. Thanks again

Sandra