A Little Breakout Here and There - MT4/MT5 Resources
This article is dedicated to discussing a specific breakout idea that I have had but never actually traded. I imagine it would be perfect for automated traders, but unfortunately I don't have the coding skills to explore this further. I believe it has similarities to Donchian Breakthrough.
The basic rules are as follows:
Long: If the close of the current bar is higher than the high of the previous two bars, enter on a breakout of the bar.
Shorts: If the close of the current bar is below the low of the previous two bars, enter the trade on a breakout of that bar.
If the trade is not executed on the next bar, the trade will be canceled.
Take Profit and Stop Loss: Both are set to the ATR(50) value at the close of the current bar. One option is to set TP to 2xATR. The theory is that while there will be fewer winners, profits can stack up during periods of large volatility. In this way, BE may occur when the trade is profitable 1xATR.
Trading Pairs: I would expect this to work better for pairs that tend to trend more than others or break out at different opening times.
Timeframe: I like the look of the 1 hour chart, but the signal occurs on any timeframe.
This is a trading idea I want to try and see if I can build a profitable system out of it. I welcome all constructive contributions! Example to follow...
The basic rules are as follows:
Long: If the close of the current bar is higher than the high of the previous two bars, enter on a breakout of the bar.
Shorts: If the close of the current bar is below the low of the previous two bars, enter the trade on a breakout of that bar.
If the trade is not executed on the next bar, the trade will be canceled.
Take Profit and Stop Loss: Both are set to the ATR(50) value at the close of the current bar. One option is to set TP to 2xATR. The theory is that while there will be fewer winners, profits can stack up during periods of large volatility. In this way, BE may occur when the trade is profitable 1xATR.
Trading Pairs: I would expect this to work better for pairs that tend to trend more than others or break out at different opening times.
Timeframe: I like the look of the 1 hour chart, but the signal occurs on any timeframe.
This is a trading idea I want to try and see if I can build a profitable system out of it. I welcome all constructive contributions! Example to follow...
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