HDR Breakout (The HDR Breakout) | Foreign Exchange EA Download- MT4/MT5 Resources
Hi traders,
Let me introduce you to the HDR breakout system . This is a standard system where we place trades when price breaks out of the trading range. But the difference lies in the way we define the trading scope. HDR stands for H Amer- D Prince R Anger.
This system works on any time frame, but to explain it we will focus on the 15M time frame. This will be the time frame we use to open the position.
So how do we plot this range?
First, we look at a time frame that is 4 to 6 times larger than the time frame we are using for trading. In our case, we wish to trade on the 15M time frame, we first open the hourly chart of the currency pair we wish to trade (1H = 4 x 15M).
What we want to do is look for 3 consecutive candlesticks with at least one shadow larger than its body . You will notice that if one of the shadows is larger than the body of the candlestick, then the candlestick will look like a hammer or a doji.
In addition to this, the first candlestick must not be an inside candlestick : it should form a higher high or a lower low compared to the previous candlestick. The second candle's body must be entirely contained within the first candle's entire range (the range from its lowest point to its highest point) . And the third candle's body must be entirely contained within the range of the first two candles .
Do you understand the meaning of these three candlesticks? They represent a trading range where there is a lot of indecision in the market. HDR is a trading range defined by the market's indecision at that moment, rather than by when price moves sideways between resistance and support zones.
Now that we have three candlesticks, we take the highest point of the three candlesticks and the lowest point of the three candlesticks.
Assume the highest point is 1.1050 and the lowest point is 1.1020. We have a 30 point difference.
The middle level of our trading range is 1.1035 ((1.1050 + 1.1020) / 2);
Instead of defining the trading range by the highest high and lowest low, we will actually set the trading range to twice the height (in this case, its height is 60 pips).
Therefore, the resistance level will be set at 1.1035 + the spread between the high and the low (30 pips here) = 1.1065.
Support is set at 1.1035 – 30 pips = 1.1005.
Now, above and below the trading range, we draw a band with a height equal to one quarter of the height of the trading range (15 points in our case).
Therefore, the buying range will be between 1.1065 and 1.1080, and the selling range will be between 1.1005 and 1.0990.
These two bands will define our buy and sell areas. Once the bullish candlestick closes within the buy zone, we enter a long trade. Once the bearish candlestick closes within the sell zone, we enter a short trade.
If the breakout occurs when a high candle crosses the entire buy zone and closes above it, we will not enter a long trade.
If the breakout occurs when a high candlestick crosses the entire sell zone and closes below it, we do not enter a short trade.
We do not trade before major FX news is released for the currencies we trade. We also do not trade during news releases and consecutive minutes, as false entry signals may occur. This applies to the M30 timeframe or lower. If we were trading for longer periods of time, we wouldn't care about the news.
We will also avoid trading any breakouts that occur outside of the London or New York trading hours. False breakouts often occur during the Asian session.
If a buy was triggered previously and the price crossed the buy zone to form a high candlestick after retracing into the trading range, then of course everything would be fine for our trade in this case.
Stop loss is set to the other side of the channel + a few pips. The first profit target is set to have the same number of pips as the stop loss so that we have a 1:1 risk/reward ratio.
When the price reaches the first profit target, you can close half of the trade and let the price rise further (if needed). And it often does. When you close the first part of the trade, you must also set your stop loss to break even.
This is just an idea, I leave the transaction management to you. I just want to show you some locations where good moves might occur.
this is an example
On the 1H time frame of AUDCHF, in a square bounded by four lines, we have three hammer or doji candlesticks that meet the above conditions (Figure 1).
As we can see, the upper line corresponds to the high of 1.0235 and the lower line to the low of 1.0218.
The intermediate level is 1.02265, and since there is a difference of 17 points, our channel will have a height of 34 points, with resistance at 1.02445 and support at 1.02095. Figure 2 shows our trading range.
Now we draw buy and sell areas on either side of the trading range (Figure 3).
Now moving to the 15M time frame, we can see on Figure 4 that a short trade was established on the first candlestick that closed in the sell zone below the channel.
Let me introduce you to the HDR breakout system . This is a standard system where we place trades when price breaks out of the trading range. But the difference lies in the way we define the trading scope. HDR stands for H Amer- D Prince R Anger.
This system works on any time frame, but to explain it we will focus on the 15M time frame. This will be the time frame we use to open the position.
So how do we plot this range?
First, we look at a time frame that is 4 to 6 times larger than the time frame we are using for trading. In our case, we wish to trade on the 15M time frame, we first open the hourly chart of the currency pair we wish to trade (1H = 4 x 15M).
What we want to do is look for 3 consecutive candlesticks with at least one shadow larger than its body . You will notice that if one of the shadows is larger than the body of the candlestick, then the candlestick will look like a hammer or a doji.
In addition to this, the first candlestick must not be an inside candlestick : it should form a higher high or a lower low compared to the previous candlestick. The second candle's body must be entirely contained within the first candle's entire range (the range from its lowest point to its highest point) . And the third candle's body must be entirely contained within the range of the first two candles .
Do you understand the meaning of these three candlesticks? They represent a trading range where there is a lot of indecision in the market. HDR is a trading range defined by the market's indecision at that moment, rather than by when price moves sideways between resistance and support zones.
Now that we have three candlesticks, we take the highest point of the three candlesticks and the lowest point of the three candlesticks.
Assume the highest point is 1.1050 and the lowest point is 1.1020. We have a 30 point difference.
The middle level of our trading range is 1.1035 ((1.1050 + 1.1020) / 2);
Instead of defining the trading range by the highest high and lowest low, we will actually set the trading range to twice the height (in this case, its height is 60 pips).
Therefore, the resistance level will be set at 1.1035 + the spread between the high and the low (30 pips here) = 1.1065.
Support is set at 1.1035 – 30 pips = 1.1005.
Now, above and below the trading range, we draw a band with a height equal to one quarter of the height of the trading range (15 points in our case).
Therefore, the buying range will be between 1.1065 and 1.1080, and the selling range will be between 1.1005 and 1.0990.
These two bands will define our buy and sell areas. Once the bullish candlestick closes within the buy zone, we enter a long trade. Once the bearish candlestick closes within the sell zone, we enter a short trade.
If the breakout occurs when a high candle crosses the entire buy zone and closes above it, we will not enter a long trade.
If the breakout occurs when a high candlestick crosses the entire sell zone and closes below it, we do not enter a short trade.
We do not trade before major FX news is released for the currencies we trade. We also do not trade during news releases and consecutive minutes, as false entry signals may occur. This applies to the M30 timeframe or lower. If we were trading for longer periods of time, we wouldn't care about the news.
We will also avoid trading any breakouts that occur outside of the London or New York trading hours. False breakouts often occur during the Asian session.
If a buy was triggered previously and the price crossed the buy zone to form a high candlestick after retracing into the trading range, then of course everything would be fine for our trade in this case.
Stop loss is set to the other side of the channel + a few pips. The first profit target is set to have the same number of pips as the stop loss so that we have a 1:1 risk/reward ratio.
When the price reaches the first profit target, you can close half of the trade and let the price rise further (if needed). And it often does. When you close the first part of the trade, you must also set your stop loss to break even.
This is just an idea, I leave the transaction management to you. I just want to show you some locations where good moves might occur.
this is an example
On the 1H time frame of AUDCHF, in a square bounded by four lines, we have three hammer or doji candlesticks that meet the above conditions (Figure 1).
As we can see, the upper line corresponds to the high of 1.0235 and the lower line to the low of 1.0218.
The intermediate level is 1.02265, and since there is a difference of 17 points, our channel will have a height of 34 points, with resistance at 1.02445 and support at 1.02095. Figure 2 shows our trading range.
Now we draw buy and sell areas on either side of the trading range (Figure 3).
Now moving to the 15M time frame, we can see on Figure 4 that a short trade was established on the first candlestick that closed in the sell zone below the channel.
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