This breakout forex strategy aims to produce profits first thing after the daily close. It targets to enter the trade as a reaction to day breakout candle. Strategy is conservative, with extremely positive risk reward ratio (1:3). Signals are extremely accurate, but infrequent. Once we enter the trade, we will follow the breakout for a prolonged time - as long as market permits. Strategy can used across multiple currency pair simultaneously.
Strategy was tested on over 15 years of historical data with great results. Due to the nature of the strategy (applied on candle close) testing is extremely accurate and reliable. Breakout Scanner EA was use to run all our historical test. Same EA can be also used for trading and optimization of this forex strategy for any other currency pair (multiplying the results).
Used tools and indicators
MACD trend and momentum filter (slow 400, fast 50): Histogram must grow in the direction of trend to confirm momentum. Trend is confirmed by position of histogram relative to zero line.
Bollinger bands (period 60, deviation 2). Breakout is identified on BB tunnel. Breakout candle closes outside of BB tunnel while previous close occurred inside. We define breakout candle by the size.
Size of the daily breakout candle (min 400 points, max 3000 points). breakout candle must close in the direction of MACD defined trend (MACD momentum must be confirmed by histogram growth).
Breakout candle must also surpass previous low/high in the direction of trend.
Volumes: tick volumes on breakout candle must be greater compared to previous candle. This signalizes growing activity on the breakout and it is critical for signal success.
Trailing stop: Advanced Trailing stop is placed on bollinger band that got broken by the breakout. Extra deviation is applied to put it further from the BB tunnel 1500 points). TS is adjusted only in the profitable direction after each candle close.
Forex strategy rules For best results: apply on multiple pairs simultaneously.
SELL
MACD histogram must close below the zero line. MACD histogram bar is larger than previous bar (closing lower than previous bar).
Breakout candle must be closing below the bottom BB while previous candle close occured within the BB tunnel.
Volume on signal candle must be larger than on previous candle.
Body of signal candle is of defined size.
Breakout candle must also close below the low of previous candle.
We enter the trade short on daily breakout candle close.
We place TS at the bottom BB + extra deviation is applied above.
Closing the trade: We close the position once price hits a TS without exception.
BUY
MACD histogram must close above the zero line. MACD histogram bar is larger than previous bar (closing higher than previous bar).
Breakout candle must be closing above the upper BB while previous candle close occured within the BB tunnel.
Volume on signal candle must be larger than on previous candle.
Body of signal candle is of defined size.
Breakout candle must also close above the high of previous candle.
We enter the trade long on daily breakout candle close.
We place TS at the bottom BB - extra deviation is applied below.
Closing the trade: We close the position once price hits a TS without exception.
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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.
