Forex trading strategy #7 (Simple breakout System)

Hi kok,

I'm fine with any questions :)
I can't, however, understand the second question of yours...

When I say 6-7am GMT, that means you look at 5 min charts and highlight the time which falls into the range between 6:00am and 7:00am. There will be 12 candles each representing a 5 min of trading. Within those 12 candles you should find a candle with the highest price point - this is your HH (Highest High) and a candle with the lowest price point - this is your LL (Lowest Low).

Happy learning,
Edward

Dear Edward,

Thank you very much. is this strategy same that is Big ben Strategy ?

Thank you
Alex

Hi Alex,

It is not the same, but it uses similar approach to identify trading opportunities, just like any other breakout method that uses timing and price combined.

Regards,
Edward

Hi Edward

great site u have.

this strategy is really amazing. So simple and effective. great job.

Only the ratio 1:1 is maybe little risky. I had run a demo and I came out at 9 wins and 6 losses. So I was thinking: why dont I put a Profit target at 140 pips(or less) and a Bollinger Band(20,1). I close(when do not hit profit target) the trade when the candle closes above BB middle or within 3 hours from the moment I go into the trade.

I put de stop loss at 26 pips(incl spread) and I dont move this until I close the trade.

I try to combine some trade systems. what u think of this???

greetings

Dennis

Hi Dennis,

Would you use BB on 5 min or on hourly charts?
(For simplicity, the role of middle BB can take SMA20)

I think it is a good approach and customization: I agree that strategy's risk management is one of the weakest points here.

What if in addition to your rules we add a rule on profit target and re-entry?

Here is the idea:
Bollinger bands (200, 1) used on 5 min charts often become effective support/resistance during early trading hours.

Thus, the outer bands of Bollinger band 200, 1 indicator (added to 5 min charts) become default profit target levels.

If 5min candle closes on the opposite side of SMA20 while we are in the trade, we exit; and immediately enter with an opposite order and a target at 200, 1 outer BB band.
If due to BB position on the chart our default profit target is not available, then we have some fixed target of 140 pips (or less) or a trading limit of 3 hours.

Again during our second attempt, our position will be closed if a candle ends up closing on the opposite side of SMA20 - our risks for the second chance (second trade) aren't large, since we initially entered near SMA20. No more entries after a second failure.

Some quick documenting of my thoughts this time :)
Hope it is possible to understand the idea.

Regards,
Edward

Also we can use BB (200, 2) as a new target when 200, 1 is unavailable.
Also, some further observations:

...BB obsession, but anyway.
Just for review:
If we look at both BB (100, 2) and BB (200, 1) on 5 min chart, places where any of BB lines cross become turning points when price gets close to them.
Thus, again, this could be our exit alert.

Regards,
Edward

Hi Edward,

I'm using it on a 5 min chart.Thank you for sharing your ideas. I've learned a lot of it.

I wanted to use a simple break out system besides
an other system I use. I also use Fibonacci trade system(also learned from this site) A great strategie. Once you know the fibonacci idea, its fantastic.

Regards,

Dennis