This system was designed to perform best in 4H chart. Its performance can be defined by 3 key components, enabling to adapt it to any market condition, even at smaller time frames. System is suitable for anyone looking to exploit breakouts occurring on market. Breakout used with this forex strategy are defined by following the trend direction, specific breakout candle size and breakout of volatility dependent BB tunnel.
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All this features combined are helping this strategy to create a viable trading logic. The system considers only candle close when identifying trend. This ensures relative accuracy of our 13 years data test on 4H EURUSD.
The systems rules are provided together with free expert advisor capable of trading it, by theforexkings.com.
Used tools and indicators
Following setting have been applied on 4H eurusd chart.
The alligator indicator filter (600,400,250) Alligator simply provides an edge for our entry. Even breakout has a better chances to succeed when it happens in the direction of trend.
Bollinger bands (period 60, deviation 1): BB are used to draw our volatility dependent tunnel. Price closing outside the tunnel signalizes breakout or at least growing momentum. Signal alone is not sufficient. The confirmation is confluence with main trend and breakout candle
Breakout candle size (30 – 300 pips). The candle closing outside of tunnel boundaries, while previous candle closed within the tunnel. The candle must have defined body size (range) to be considered a signal confirmation.
Advanced trail stop. BB line that just got broken will lead our trailing stop. If price moves rapidly, after the breakout – as it should with valid signal, will not touch TS until its exhaustion and we will collect profit. Additional distance 110 pips to cover the volatility is applied.
Forex strategy rules
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All alligator lines aligned according to downtrend from slowest at the top to fastest at the bottom.
Price breaks below bottom BB. Breakout candle has a body size of 30 – 300 pips.
Trailing stop is placed at the bottom BB + extra deviation of 110 pips to cover the volatility (corrections).
TS based on lower BB will be the only way of how to stop the trade.
All alligator lines aligned according to uptrend from slowest at the bottom to fastest at the top.
Price breaks above upper BB. Breakout candle has a body size of 30- 300 pips
Trailing stop is placed at the upper BB - extra deviation of 110 pips to cover the volatility (corrections).
TS based on upper BB will be the only way of how to stop the trade.
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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.