Breakout system with JL-Lines

EAcpu | 2 reads | 0 comments | 2026-05-03

Hello everyone!

I spent some time developing a breakout system that I found to be enough to warrant public invective.

I'm not a very experienced forex trader, so there may be aspects of my system that you, as an experienced forex trader, might consider to be wrong, nonsense, or whatever.
All I can say is that this worked for me, and one of the reasons I'm posting my system is that I want to give back to this forum. I've read a lot of systems on this forum and learned a lot from them.

I hope that you who read this system either like it for what it is, or maybe have an idea to create a system of your own.

background

This system is based on my theory that everything in this world affects another thing. The same is true in Forex market trading…

But the question is how much influence past conditions have on future conditions.

I tested a lot of things to see if there was some connection between them.
I drew lines almost all over the chart just to find something that matched my theory.
I calculate with pivots and so on, and so on.

I failed every time. I just can't find anything...

Maybe I'm not smart enough to think for myself. Until one day, while I was sitting in my chair in front of my computer, an idea occurred to me that I had never thought of before.

My line was born. Out of bad fantasy, I named them JL-Lines, JL being my real acronym.

JL Line - Setup

So what is the JL line?

(See the second post in this thread to see.)

As you can see, there are 4 rows. Each of these has important implications.
I will tell you more about this later in How to Trade the JL Line.

But... now you're probably wondering how I create my lines.

These lines are based on Fibonacci numbers...or more accurately, percentages that we Forex traders like to use to look at support and resistance levels.

As you know, some of the most commonly used percentages are:

100%
61.8%
50%
38.2%
23.6%

I use this percentage to measure the importance of the daily price range.

I believe yesterday's price action is more important than the 10-day trend.

For example:

December 12th is more important than December 13th, then December 6th.

Because these lines are so important for this system, I'll give you a complete example of what the (theoretical) calculation looks like.

Theoretical example:

Let's say we want to trade on JL-Lines on Monday, December 11, 2006. The opening price of GBP/USD that day was 1.9580.

Then we look back at the previous trading day, in this case Friday the 8th.
The range from open to close is 98 points. >>

The importance of this day is 100%, so we give the importance of the previous day 98 points (1 * 98 = 9http://www.spreadtrade2win.com/forum.../icon_cool.gif.
----------
The day before was Thursday. In this example, the open to close prices are 72 points.

The importance of this day is 62.8%, so we give the previous day an importance of 45.2 points (0.618 * 72 = 44.496).
----------
The third day before was Wednesday. In this example, the opening to closing prices are 104 points.

This day has an importance of 50%, so we give the previous day an importance of 51 points (0.5 * 104 = 51).
----------
The fourth day before was Thursday. In this example, the opening to closing prices are 85 points.

The importance of this day is 38.2%, so we give the previous day an importance of 32.47 points (0.382 * 85 = 32.47).
----------
The fifth day before was Monday. In this example, the opening and closing prices are 124 points.

The importance of this day is 23.6%, so we give the previous day an importance of 29.264 points (0.236 * 124 = 29.264).

Now the first part of the calculation is complete. You now know how important each day's points are to your trading day.
All in all, it looks like this.

1 – 98 points
2 – 44.496 points
3 – 51 points
4 – 32.47 points
5 – 29.264 points

We now need to calculate the average (in points).

(98 + 44.496 + 51 + 32.47 + 29.26) / 5 = 51,0452 points

This is a channel where price moves until it breaks out in one direction.
This line is equidistant from the opening price.
To achieve this, you simply divide 51.0452 points by 2.

The result is: 25.5 points above the new day's opening price (using 26 points), and 25.5 points below the new day's opening price (using 26 points).

You should now have 2 lines drawn on the chart. One portion is 1.9606 and one portion is 1.9554.

You now have a 52-point channel.

I call these lines breakout line A and breakout line B. Breakout line A represents above the breakthrough line, and breakout line B represents below the breakthrough line.

Now we only need two more lines to complete the setup. This line is a breakout of Stop H (a breakout of Stop High) and a breakout of Stop L (a breakout of Stop Low).

These two lines are calculated exactly the same way we calculated the Break A and Break B lines.
The only difference is that instead of using the spread range from the open to the close of the day, we use the high and low of the same day.

Suppose this calculation sums up to the following (remember, this is just hypothetical points, opening and closing prices, etc.):

1 – 164 points
2 – 93.5 points
3 – 72 points
4 – 67.8 points
5 – 42 points

The average points are as follows:

(164 + 93.5 + 72 + 67.8 + 42) / 5 = 87.86 points

Divide 87.86 by 2 and you get: 43.93 = 44 points

Use it the same way we used the Break A and Break B lines.

That is, you draw a line 44 points above and below the opening price of the trading day.

Now you will have all four rows.

Break through the stop loss high of 1.9624

Breakout line above 1.9606

The breakout line is below 1.9554

Break through the stop loss low of 1.9536

I don't know how to write an indicator, but I have an Excel document. I use it to calculate these lines.
If anyone wants to make an indicator...please be my pursuit. If anyone would do this I would be happy.

Setup is complete...all you need to do now is use it correctly....

How to Trade JL Line

Now you have lines on your chart and are ready to trade.
I'll just describe how I trade it. I'm not going to tell you how you should trade. I believe it depends on the trader themselves how they wish to use it.

I used a 1 hour chart, but you can use 4 hours, 30 minutes, 15 minutes, 5 minutes, etc.
But remember, the shorter the time frame you use, the less important it will be.

I only trade on bar closes. Closed never before.
In my chart you will also see the Pivot Points, Yesterday's High-Low, and the Vegas Tunnel Line. These are optional of course, but I like them and I use them in my trading.

To some of you it may seem like my stops are too tight, and that may be true. Each of you can manage your money to your liking. The reason I use strict stops is that I would rather have 5 days of small losses and 1 day of large profits than 5 days of medium losses and 1 large profit.
But...I have never experienced a major loss or multiple consecutive days of losses due to this strategy.
So I thought my stop loss rule might be a really good way to trade this strategy.

I've gained 843 points in the past 5 weeks. Excludes spreads.
Different brokers use different spreads, so you can test it at your broker.
But if I calculate the spread of FX Solution, the profit will be 843 – 125 = 718 pips.

I only trade in GBP/USD. Mainly because manual calculation takes some time.

Long position rules:

If the candlestick closes between breakout A and breakout stop H, go long.

Set your stop loss to the opening price of the day.
*Or in Rest B (please read below).

When I gain 20 pips, I move my stop loss to breakout line A.

If the price continues to move in my favor, I will move my stop to the nearest line (JL line, pivot line, yesterday's high-low, or Vegas line) once the price is 30 pips above the nearest line.

Do not place a trade if the candlestick opens from below the breakout stop A and closes above the breakout stop H.

Short position rules:

If the candlestick closes between Break B and Break Stop L, go short.

Set your stop loss to the opening price of the day.
*Or at Break A (read below).

When I gain 20 pips, I move my stop loss to break line B.

If the price continues to move in my favor, I will move my stop to the nearest line (JL line, pivot line, yesterday's high-low, or Vegas line) as long as the price is 30 pips below the nearest line.

If the candlestick opens from above the breakout B and closes below the breakout stop L, do not enter the trade.

Special stop loss

If the channel is less than 40 pips, when I go long, I will use the breakout line B as a stop loss nr.1.
If the channel is thinner than 40 pips, I would use the breakout line A as a stop on the short trade.

If you prefer, use a trailing stop.

schedule

Yes, it works on weekly charts and monthly charts too. But you will need a larger stop loss.

If you are using I on a weekly chart, you will need to calculate the weekly range from open to close and high to low in the same way as described in "Theoretical Example" above.
Then you need to open a position on the daily chart or the 4-hour chart.

If you use monthly charts, you need to open your position on weekly or daily charts.

I never trade in this time frame because I can't afford to take a stop loss.

My advice is to calculate the daily importance and take position on the 1 hour chart.

Summarize

Well, that's it... I hope you understand the system. I apologize if my spelling is terrible at times.

If anyone wants to develop a metric, I would be very grateful and happy.

If you have any questions, please ask them directly. I will try my best to answer quickly and correctly to help you.

/ JoLimoney <STYLE type=text/css></style>