This breakout forex strategy works very well in all time frames above 1H. It combines trend identification, tunnel drawing and breakout properties to be successful. As a few others breakout forex strategies it also considers volume on breakout candle. Growing activity on candle is proven to increase accuracy of entry when used correctly.
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We will use demarker as main trend and momentum identification tool. Simple BB volatility dependent tunnel, will help us identify a breakout opportunity. Breakout must be also confirmed by growing volumes. For liquidation, two methods are used. Simple take profit and trailing stop based on broken BB line.
Forex strategy was tested on high quality historical data since 2003 (EURUSD 1H tick) and it is provided with expert advisor by theforexkings.
Used tools and indicators
Demarker (DEM 100) momentum indicator and trend filter. We will draw additional lines in the indicator window to modify and adjust sensitivity to trend and range (sell below zone 45, buy above zone 55). Adjust those parameters and indicator period to modify its sensitivity.
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Bollinger bands (BB period 60, deviation 2) BB tunnel is used to identify a breakout candle. Breakout must occur in the direction of DEM identified trend.
Volumes: Confirmation tool. Make sure you choose a broker with reliable tick data that will add value to this filter.
Advanced trailing stop (extra deviation 20 pips) In breakout situations, broken support will often turn resistance and vice versa. This is a perfect opportunity to turn it into a trailing stop while breakout lasts. Broken BB line will lead out tailing stop and extra deviation may be applied to cover for market volatility.
Forex strategy rules
SELL
Demarker trending below sell below zone. Downward momentum. Look for short trades only.
Breakout of the bottom bollinger band. Candle closing below it, while previous candle closed within the tunnel.
Volume is larger than on previous candle (Activity is growing – breakout more likely).
Enter the trade short. TS is placed on bottom BB + extra deviation above it.
Take profit: 160 pips
BUY
Demarker trending above buy above zone. Upward momentum. Look for long trades only.
Breakout of the upper bollinger band. Candle closing above it, while previous candle closed within the tunnel.
Volume is larger than on previous candle (Activity is growing – breakout more likely).
Enter the trade long. TS is placed on upper BB - extra deviation below it.
Take profit: 160 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.
