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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Can this strategy be used for EUR/USD too?
Thanks
It should work for EUR/USD pair as well, but will usually produce less pips.
Edward.
Hi there, isn't a 20 Pip Stop Loss a little bit on the short side. Would this strategy work if you used the other side of the tunnel as a Stop Loss, whatever the amount.
Thanks.
Sure, it can be done so; and logically it's the only right choice. However, when a tunnel is too wide one may consider a smaller stop loss value.
So, if i may ask; we get the high and low of 6:00am GMT to 7:00am GMT and enter at 8:00am GMT when a 5 minute candle closes above the high or low?
Thanks
Yes, for GMT zone it will be from 6:00am to 7:00am.
However, we don't wait till 8:00am to get into a trade. Starting from 7:05am we are ready to open a position once requirements on 5 min chart are met.
Regards,
Edward.
Hi Ed,
If we never get a candle to close outside the channel, does it means that we do not enter a trader at all? Like today?
SP
Hi,
Yes, it means we don't have a valid entry signal; at least we won't be using current system for the day.
On Nov 22 this year we had Thanksgiving Day in US and Canada. Therefore, trading volume in the Forex market was poor.
Regards,
Edward.
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