Forex trading strategy #7 (Simple breakout System)

To Edward and all web participants............ Does anyone know of , or have

experience with the Big Ben strategy by

Kristian Kerr In Currency Trader magazine Sep't. 04 ?? ?

Fraser

Great!

Very Good, I like it, hope you can improve it.

Thnx
dynaseo
http://www.dynaseo.com

Hi Fraser,

Good point.
As long as risks are evaluated, with high impact news coming traders may look for trading immediate breakouts on both sides.

Regards,
Edward

Hi Edward-

When entering a trade just before a news release , is it best to place 2 limit orders , one to buy and the other to sell, in order to enter a trade in whatever direction the market goes ?

Fraser

Hi

Slngupta, demmybanksfx ... I appreciate very much your response and input. Have tried various adjustments to anticipate breakouts, should they happen earlier then expected by the strategy. While this can be done, to some degree of success, what I'm after is something that preserves the core strength and beauty of this simple strategy. Example - can we identify why things go our of whack (some condition that happens in the Market), timing, or is it simply cyclical. When it comes to modifying the/any strategy, things can get so far from the original sometimes.

I'm looking to understand why the Simple Breakout Strategy doesnt perform. I'd like to identify and respect those conditions, and simply not use the strategy during those times.

Edward, thank you for the point made on using Pivots as a guide. It will surely help steer us away from trades that turn too quickly. Its a very valuable counter measure that can keep us in the game.

Many Thanks Everyone,

Sandra

Hi everyone,
Thank you for constructive comments and analysis of the problem.
I looked at it again today and what can be done..
Well, to be honest, I have no quick fix... and I don't want to add indicators here.

On the first look, I think what we can try is focusing on Pivot point levels and how far they are from our entry point. If a nearby pivot is less than 20 pips away, there is a good reason to skip a trade, because price may turn at that level; or if it is, for example, 18 pips away, to adjust our profit goal to that number.

Anyway, these are just speculations, I'll run some further tests, including suggestions you gave to see how we can improve the winning rate.
Your further comments and notes are also welcome.

Regards,
Edward

I meant 7am GMT in my earlier post in the last line.
"I feel, we need to figure out some criteria for getting into the trade at 12:30 or earlier whenever required.". 12:30 pm is my local time

Sandra,

Even my observations are very much similar to your's on this strategy and even Iam a big fan of this strategy.

I have tried to figure out some common things in all my losing trades. As per my observation, in most of my losing trades, I see a good trend and movement in price before 7am GMT. Normally, for any breakout, we like the price to confine to a smaller range before a breakout. Sometimes I observe the price starting to have a trend before 7am GMT. But we need to wait till 7am GMT as per our strategy and then look for a breakout. As the movement has already begun by that time, the further breakout is not that strong causing the price to revert before we get our 20pips.

I feel, we need to figure out some criteria for getting into the trade at 12:30 or earlier whenever required.

Looking for Edward's comments.

Thanks,
slngupta.

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

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

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 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

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

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

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