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.
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what does it mean by (channelwidth of 45 ) ?
It means that the channel is 45 pips wide.
Please see the screenshot below.
Regards,
Edward
hello ED! i have been learning forex trading for some time now, and this site has been one of the great resource website that has boost my knowledge about forex. thank you so much for your effort to making this site a reality.it has been a big help to me. i just wanted to know if this strategy could work for other market opening sessions, like New York, Tokyo and Sydney opening sessions?
Thank you for your feedback!
I'm glad you've learned a lot with us.
Behind the strategy is a concept of approaching any breakout with virtually any trading sessions. All you have to do is to figure out which hours are the most significant in the preparation for a breakout for each trading session.
Regards,
Edward
Hi Ed,
What a fabulous strategy. [have traded it live and it is a pip maker.Pls Ed could you recommend other strategies/systems that have high accuracy like this one. Meanwhile I doff my hat for a great work.
Soremto.
Thank you, Soremto
among other strategies, I'd recommend reviewing advanced #5 & #10.
However, we have so many ideas and methods here, that it would be worth reviewing the rest of the strategies as well.
As an example, we've got a trader who had successfully combined few of the strategies into one simple and effective method:
http://forums.forex-strategies-revealed.com/combination-strategies-t140....
Best regards,
Edward
Hi Edward,
I've noticed that when the whole candle closed on the 5 min chart let's say suggesting an uptrend but the candle is bearish It gives a fake signal and the trend goes back down. Can I use this as another rule for this system? Or should we go long besides that?
Good point, thank you.
During a breakout to the upside, when a signaling candle (the first whole candle to close outside the channel) is bearish, it would be rational to postpone our entry. When the negative momentum is forming, we don't want to run against it - makes little sense - not only for this strategy, but for other strategies as well.
It is in or best interest to go with the momentum. I support your choice and a new rule that on a bearish candle it is better to postpone the entry, until the momentum returns: until we have a bullish candle, or if price advances up past the bearish candle, as shown on the illustration below.
I use this entry method quite a lot.
The idea is on a downward retracemet place a Buy stop above the last closed candle.
If the entry is not filled, trail it down to the next closed candle, and so on until you get filled.
Best regards,
Edward
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