Advanced system #1-a (Midnight setup addition: Trading Breakouts of the Breakouts)
Submitted by Edward Revy on February 22, 2008 - 10:47.
Current trading method was developed as an addition to original Midnight Setup strategy, but can also be traded alone or in combination with any other Forex strategy.
The idea is to filter out some big portion of false breakouts in our case above/below daily candles.
Setup: daily charts and 5 min charts, no indicators.
Entry rules:
Using rules from Midnight Setup strategy we get ready to enter on the break of the daily candle's high or low.
However, this time instead of placing Buy/Sell stop orders above/below daily candle, we aren't placing any, but rather waiting for actual breakout to occur.
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Hi Edward
Thank you for your advice. I think the retracement will help a lot in term of fake breakout. To be frank i lost quite a few pips using the first method. Mainly due to last week huge fluctuation in the market.
I am looking forward to try this method and hopefully it can cover fake breakout.
Regards
Jimmy Chung
Hi Jimmy,
Price rarely spikes without retracements on 5min charts. But if it does, we won't have a chance to enter.
You also shouldn't expect price to retrace within 15 minutes or so, it may easily take hours before a retracememt is complete.
Regards,
Edward
Hi Edward
What if there is no pull back in 2-3 5mins candles after daily break through? Should we just skip the trade or enter right away?
Regards
Jimmy
Oh, right.. I should have thought better before asking.
Yes, the strategy is similar to the one I have. But you've got more, you are going in with two orders. A low risk entry after a doji is extremely attractive (I'd place a stop just outside the doji).
In my opinion this simple approach should work very well. Well done! And thank you for bringing it.
Regards,
Edward
Hi Edward, I dont enter at 5pm, i usually start looking for trades around 00h00 est time using the high/low of previous day, being from 17h00 to 17h00. Once the pair breaks the high/low of previous day i wait for a pullback, then once i see a doji i enter the first lot, then another lot when it breaks the first low. Very similar to this strategy. Been working very well in these conditions we in.
Regards Lino
Hi Lino,
does it mean you enter after 5:00pm Eastern time?
Just to confirm that I understood it right.
Thank you.
Edward.
Hi Edward.
Im using charts with est time, my daily close time is 17h00. I draw vertical lines on the daily chart, i then wait for a break of the highs or lows, i use the 15min chart, once broken i wait for a pull back and usually confirm entry with a doji candle for the first entry, then once breaks that high or low enter again i enter second lot, I would greatly appreciate your opinion on that.
Regards Lino
It is not only about False breakouts, it is also about entering at the right time and saving lots of nerves for those Forex traders who like checking upon their charts more than once a day. Before an entry order is finally triggered there could be a large pullback that may shake positive believes of some traders currently watching their positions or trigger tighter stops if such were chosen instead of regular stops.
Regards,
Edward.
halo syanwar..can you share this EA for us?
Hi,
I checked the GBPUSD for the last year and I could find only a few days where the case which you want to eliminate (fasle breakouts) occur. And for the most of those cases if you keep it for one more day then it turns to your advantage.
And as you said already you can't set it once in the morning and forget about it for the rest of the day.
But maybe this system can be improved:
If the days candle is short (shorter then 100 for GBPUSD pair) then you can set a conditions for the next day trade only in one direction (direction of the main trade preferrably)
If the trend is unclear then set your limit equal to 50 (I think that will prevent most of false breakouts as well).
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