This trading strategy will be loved by those looking for that perfect big trade with exceptional risk reward ratio. With this system, RRR is anywhere from 1:20 to 1:100 ( risk 10 usd to get 1000 USD).
Typically that would require unrealistically tight stop loss versus ridiculously distant take profit. This will not be the case for this trading system.
To achieve our goal of getting 1000 usd risking only 10 USD (or proportional equivalent), pyramiding (adding to the winning trade) will be applied during the news.
Direction of price move cannot be predicted. However we can predict with near certainty, that market will move wildly and rapidly during high impact news. We will take advantage of price moving in any direction. This strategy is therefore market neutral.
We will be looking for specific trading situation: High impact news release (USD/EUR/GBP/JPY). News must be accompanied by narrow trading range beforehand (showing anticipation of a big move).
We will use pyramiding method to enter the trade with multiple partial trades, increasing lot size (up to 20 times of initial lot size) while not risking more than 10 - 20 pips overall.
This way we can build position that will be 10 -20x larger than our initial order, while risking the same tiny amount.
Used tools and indicators
No indicators. Price only.
We will trade on rapidly moving price. High accuracy is necessary and there is no room for hesitation or mistakes. Expert advisor is necessary. Both for testing/scaling and trading. MT4 EA was created specifically to trade this forex strategy (News and breakouts MT4 Expert advisor by theforexkings).
Forex strategy rules
We will be looking for a narrow price range on 5 minute chart. Range must be created before major news release (high impact). Any major currency pair.
News range must be identified 5 - 15 minutes before release of high impact news. Flat range signalizes market anticipation of big market moves. In some cases, trading range will not be present in the chart before the news. This signalizes lack of anticipation. It is possible that the news are already included in price. We Avoid trading this events.
Considering that this trading strategy operates in 5 minutes timeframe during volatile price conditions, Expert advisor is absolutely necessary (This strategy is traded exclusively by News and breakouts MT4 Expert advisor by theforexkings).
News and breakouts MT4 Expert advisor inputs:
Apply EA on multiple trading pairs: Only allow trading (TRUE input) on the one you wish to trade.
We input sell below price (bottom of the range, support).
We input buy above price (top of the range, resistance).
Pyramiding step: 20 - 50 depending on currency and type of news event.
Number of trades: 10 -20 depending on currency and type of news event.
Max loss: - 1 to - 2 USD per 0,01 lot size used (put minus-, before max loss input)
Target profit: 10 trades: 30 - 60 USD, 20 trades: 80 - 160 USD (per 0,01 lot size)
Trailing stop is not used: Set it extra wide.
Before the news release, price remains in trading ranged marked by SELL below and BUY above inputs.
EA will buy/sell below the respective zones after the news release. Pyramiding trades will be opened. Price will usually move rapidly in one or the other direction,triggering subsequent trades while limiting loss. Each subsequent trade is opened while previous trades are already in profit.
EA will continue to open trades until it opens 10 -20 trades simultaneously
All trades will be closed on overall target profit: of 30 - 160 USD.
Max loss per entry: 1 to 2 USD.
EA should be launched few minutes before the news release. Make sure to correctly setup the trading range. Fake Outs are possible. It usually take few attempts for an EA to get into the trade and win it. Considering the risk reward ration. Correctly entering on one trading scenario per month will make the system perform with profit during the month. Let EA operate as long as moves continue. Once it stops. Stop EA also. Take whatever the profit you can.
Notes: Considering the fact that EA operates during the most extreme market conditions, excellent broker is necessary. Only way to avoid slippage is to use reliable ECN/STP broker with reasonable spread and commission. Trading with any dealing desk broker will not bring positive results for this forex strategy.