Learn Forex Trading: Breakout Forex Strategies

Showing posts with label Breakout Forex Strategies. Show all posts

Tuesday, December 22, 2015

Map of the Market with Breakout

Map of the Market with Breakoutis a trading system whose purpose is to identify the movements that occur on a day in all three sessions (Asia, Europe, America).

Time Frame 15 min.

To achieve this goal I have identified five boxes on the chart:

first (2:00 -3: 00);

second (5: 00- 6: 00);

third (9: 00- 10:00);

fourth (15: 00- 16:00);

fifth (17: 00- 18:00).

These boxes are determined by the fact that the market movements on average occur after these hours.

First way

Buy

Place a buy stop order 2 pips above the last 15 minute candle of the box.

Sell

Place a sell stop order 2 pips below the last 15 minute candle of the box.

Second way

Buy

Place a buy stop order 2 pips above the high of the box.

Sell

Place a sell stop order 2 pips below low of the box.

Profit target 15-20 pips. Aggressive profit target 5-7 pips.

Initial stop loss 20 pips after 14 pips in gain move stop at the breakeven.

You can also use a trailing stop of 15-18 pips.

In the examples show both ways to buy and sell.

I recommend the second, to consider, the maximum and minimum of the box to place pending orders.

Sunday, November 22, 2015

50 Pips daily set and forget

Breakout Forex Strategies

The “50 pips Daily- Set & Forget” system is a very easy set and forget system where you don’t have to watch the market day and night. It is perfect for beginners and people with 9am-5pm day jobs.

The algorithm is based on a 6:00pm est – 6:00pm est (yesterday – today) range and Asian Session opening around 7:00pm est.

Let’s begin:

Forex Candlestick charts show sets of data consisting of open, high, low, and close values of each period.

The hollow and filled section is called “the body”. The lines above or below “the body” are called shadows or tails. If the stock has closed higher than the opening price, then a hollow candlestick is drawn. In addition, if the stock closed lower than the opening price, a filled candlestick is drawn. In a hollow candlestick where closing price is higher than opening price, the lower body shows opening price and the upper body shows closing price. In a filled candlestick where closing price is lower than opening price, the lower body shows closing price and the upper body shows opening

price. Hollow means stocks up and filled means stock is down.

The system works on the majors pairs.

The rules of this system are simple, and managing trades, and calculating levels will take no more than five minutes of your time. The only tricky part is using your knowledge to set limit orders.

This trading system involves 3 simple steps.

1. Get ready around 6:00 pm EST

2. Identify your entry levels

3. Place 6 limit orders

The Strategy Step by step:

. 1. At 6:00pm EST pull a 2H (or 1H or 4H - doesn't matter - it will be used only to determinate high/low of the 24 hour) chart USD/JPY. See example above.

2. Identify the USD/JPY high and low of the 24 hours period

from 6:00pm to 6:00pm ( let’s take an example high=90.50 and low=90.00 )

3. Identify your entry levels

Set 3 BUY orders 7 pips above the high (high + 7 pips)

Order 1 Entry: High +7pips

Set take profit 15 pips and stop loss 25 pips

Order 2 Entry: High +7pips

Set take profit 35 pips and stop loss 25 pips

Order 3 Entry: High +7pips

Set take profit 50 pips and stop loss 25 pips

Example:

USD/JPY High=90.50 Low=90.00

Order example 1 LONG=90.57 Take Profit=90.72 Stop

loss=90.32

Order example 2 LONG=90.57 Take Profit=90.92 Stop

loss=90.32

Order example 3 LONG=90.57 Take Profit=91.07 Stop

loss=90.32

5. Set 3 SELL orders 7 pips below the low (low -7 pips)

Order 1 Entry: Low -7pips

Set take profit 15 pips and stop loss 25 pips

Order 2 Entry: Low -7pips

Set take profit 35 pips and stop loss 25 pips

Order 3 Entry: Low -7pips

Set take profit 50 pips and stop loss 25 pips

Example:

High=90.50 Low=90.00

Order example 1 SHORT=89.93 Take Profit=89.78 Stop

loss=90.18

Order example 2 SHORT=89.93 Take Profit=89.58 Stop

loss=90.18

Order example 3 SHORT=89.93 Take Profit=89.43 Stop

loss=90.18

6. Done! You don’t have to monitor your trades. All will be

done by your limit orders.

IMPORTANT: CANCEL ALL ORDERS IF NOT TRIGGERED ON

THE NEXT DAY BEFORE 6:00pm EST

Do not trade: If the 6pm – 6 pm range is too big – over 150

pips.

Sunday, December 21, 2014

Simple Day Trading Breakout

Breakout Forex Strategies

Simple Day Trading Breakout is a strategy can be implemented as a full trading system and best of all is that you can use it even if you just can trade 10 minutes a day. The best period to use this strategy is between 8h and 18h GMT (3am and 1pm EST).

We can use this strategy only for EUR/USD and for GBP/USD. Since the rules for each of these currency pairs are different, I’m going to divide this strategy rules for each currency pair.

The first thing you need to do is to draw 2 lines: one at 24h GMT (7pm EST) and the other one at 8h GMT (3am EST). These lines are going to be our entry point’s reference.

If during this period EUR/USD has moved more than 60 pips, you won’t have any trade during the day. If EUR/USD has had less than 60 pips volatility during this time span, you can have a buy or a short sell opportunity.

In this strategy, we will use a fixed stop loss as well as a fixed target.That’s why you can use this strategy as a mechanical trading system.If at 18h30 GMT (1:30pm EST) you’re still holding the trade becauseit didn’t reach your target or your stop loss, you should exit thetrade.

This strategy can be used in 5, 10 and 30 minutes as well as in 1 hour charts.

Trading rules Simple Day Trading Breakout

To enter in a long position: You should enter your buy order 10 pips above the higher line - that you draw in the chart -, which represents the higher price EUR/USD achieved between 24h and 8h

GMT (7pm and 3am EST). You should also place a 25 pips stop loss order.

To exit a long position: Your target is 40 pips. If EUR/USD doesn’t reach it, you should exit the trade at 18h30 GMT (1:30pm EST).

To enter in a short sell position: You should enter your short sell order 10 pips below the lower price achieved between 24h and 8h GMT (7pm and 3am EST). You should also place a 25 pips stop loss

order.

To exit a short sell position: Your target is 40 pips. If EUR/USD doesn’t reach it, you should exit the trade at 18h30 GMT (1:30pm EST).

Simple Day Trading Breakout

The short sell order was triggered at 1.4286. You now have a stop loss set at 1.4311 and a target at 1.4246. Our target was reached. We made 40 pips profit on this trade.

Thursday, November 27, 2014

Fading false breakout

Breakout Forex Strategies

This strategy is specifically designed for the euro/U.S. dollar (EUR/USD) currency pair. The plan is to enter a sell order above the market, in order to fade a move higher, and at the same time enter a buy order beneath the market, to trade against a move lower. In both cases we are assuming

that any directional movement is false, and the exchange rate is likely to retrace.

Such a directional move is likely to be caused by a large order, which would not have the power to move the market under normal circumstances. Since the volume is extremely low at this time of day, these orders now have the ability to create market movement under “thin” trading

conditions.

Setting

The sell order will be located 15 pips above the “opening” price, and the buy order 15 pips below. Our stops will be located 15 pips away, creating a risk/reward ratio of 1:1 for the trade (one pip of risk per one pip of potential reward).

Since this trade is only designed for only one currency pair, the EUR/USD pair, we can set fixed-pip parameters. If this technique were at tempted with any other currency pair, the parameters would have to be adjusted to account for the difference in volatility.

The trader would also have to consider that the spread for most currency pairs is wider than EUR/USD. Because the “playing field” for this trade will be small, every pip takes on added importance.

This is a brief, “slingshot”-style trade that is designed for quick profits, perfect for EUR/USD. This pair tends to have a very narrow spread, making it ideal for a short-term trade.

Entire the trade: fading false breakout

Let’s take a look at this concept in action. At 17:00 Eastern U.S. time, the openingpriceonthefive-minuteEUR/USDchartis1.2583(seeFigure1).

We’ll place a sell order 15 pips above the opening price at 1.2598, and a buy order 15 pips below the open at 1.2568.

If we do not have a trade execution within two hours, we will cancel both the buy and sell orders. At that point, the reason for placing the trade is no longer valid, because the Asian markets are beginning to stir, and volume and volatility are about to increase. When real volume enters the market, the moves are more likely to be real, so a strategy that fades breakouts would be inappropriate under these circumstances.

After initially drifting higher, the exchange rate drops, and the buy order is executed at 1.2568 (see Figure 2). Our stop is located 15 pips below the entry point, at 1.2553. This is very important we immediately cancel the sell order at 1.2598. Our target will be a modest return to the

opening price, or 1.2583.

Within a few hours, the exchange rate aimlessly drifts toward the exit point of 1.2583, and the trade is completed (see Figure 3). The trader has the option of exiting the entire position, or closing a portion of the trade and moving the stop to the breakeven point.

The EUR/USD “opens” at 1.2583; the buy order is executed at

1.2568

The entry point of 1.2583 is also the exit point.

The exchange rate reaches the exit point of 1.2583.

Thursday, November 13, 2014

The High/Low Breakout

Breakout Forex Strategies

The High/Low Breakout is a forex strategy intraday based on the break of the previous day high or low.

Time Frame H1

Currency pairs: majors.

Indicator:

ADX 14 period with 35 level.

Trading Rules The High/Low Breakout

Buy

1. Find a currency pair with ADX is less than 35 but above 25.

2. Wait for the price to break below the previous day’s low by at least

15 pips.

3. Place an pending order price to buy 10 pips above the previous day’s high.

4. After that order fill, place your initial stop no more than 25 pips below the entry point.

5. Profi target 30-40 pips or exit postition at end of the day.

Sell

1. Find a currency pair whose 14-period ADX is less than 35 but above 25.

2. Wait for the price to break above the previous day’s low by at least

15 pips.

3. Place an pending order to sell 10 pips below the previous day’s low.

4. After that order fill, place the initial stop no more than 25 pips above

the entry point.

5. Profi target 30-40 pips or exit postition at end of the day.

In the examples we have two trading on GBP/USD hourly charts, all conditions are agree.

ADX 14 is below 35 level at the previous day High/Low.

First Example

Previous day low 1,5835. We look for a break below the previous day low. - Pending order 1,5835 -10 pips= 1,5825. Place stop loss of 25 pips. Profit Target 30 pips.

Second Example

Previous day high 1,6096. We look for a break below the previous day low. - Pending order 1,6096+10 pips= 1,6106. Place stop loss of 25 pips. Profit Target 30 pips.