This forex strategy uses three methods of breakout identification and confirmation. It also uses tight stop loss in form of trailing stop. To maximize the profit potential, TS is adjusted after each candle close. Strategy was tested for profitability on historical data since 2003. It has passed all tests with flying colors.
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Strategy is provided together with expert advisor by theforexkings. You can optimize the strategy for different time frames and currency pairs as we have tested it only for EURUST 1H tick data. According to our test, strategy offers high profit potential with limited draw down.
Used tools and indicators
DeMarker (DEM 100). Demarker oscillator will be our primary way of identification of long term momentum (trend). To do sow we draw a central demarker zone. Indicator trending above will allow long signal, indicator trending below it will trigger short signal. Central zone can be adjusted (buy above/sell below). This will filter out most of the unsuitable in range signals. However, in our testes we have omitted this powerful option.
Envelopes forex indicator (dev 0,4, period 60). Envelopes are used to draw a price tunnel. Price closing outside of tunnel boundaties will trigger the entry signal.
Big breakout candle. Breakout candle must have specific size of the body from (30 -150 pips in test) to trigger and confirm the position entry (min max input of EA). This will ensure that the breakout will not be triggered by flat, indecisive candle stalling the price.
Trailing stop. After each candle close trailing stop is adjusted only in the direction of profitable trade. Additional distance of 30 pips is applied in test for better results.
Forex strategy rules
SELL
DeM trending below sell below zone (0,5). This confirms the downward momentum.
We will be looking for a short signal.
Short signal: price closing below the bottom envelopes while previous candles low was above it.
The breakout candle has a body in range of 30 to 150 pips.
Trailing stop is placed at the breakout candle high + extra distance. It is adjusted with each candle close only in downward direction. Trailing stop is not the only option of trade closing.
We also use predefined take profit value of: 140 pips
BUY
DeM trending above buy above zone (0,5). This confirms the upward momentum.
We will be looking for a long signal.
Long signal: price closing above the upper envelopes while previous candles high was below it.
The breakout candle has a body in range of 30 to 150 pips.
Trailing stop is placed at the breakout candle low - extra distance. It is adjusted with each candle close only in upward direction. Trailing stop is not the only option of trade closing.
We also use predefined take profit value of: 140 pips
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Disclaimer: Expert advisor was tested for profitability on historical data. All screen shots provided are displaying real results of the test. However past data will never guarantee future success. Every expert advisor needs to be tested properly on demo account. LIVE use only on your own risk. Read full disclaimer. TheForexKings Team does not give any financial advice. TheForexKings does not take any responsibility for any user’s investments and investment decisions. All rights reserved. Strictly for personal use.
