Momentum breakout forex strategy

Quiet market can suddenly gain momentum. This breakout in the direction of trend doesn't have to break any channel. When accurately defined and traded in the direction of general market flow, it can provide the trader with statistical edge necessary for long term profit. With this  forex strategy, we will be looking for sudden rise in momentum (breakout) and follow it in the direction of trend. 

Forex strategy was tested with high accuracy on over 15 years of historical data. Breakout Scanner EA was used for testing. Expert advisor was developed by our team and enables of optimization, testing and trading of this forex strategy (and hundreds more). EA can be used for simultaneous trading of any FX instrument and any time frame.

 

Used tools and indicators 
Apply in 1H chart of EURUSD. Optimize before using this forex strategy on other currency pairs or timeframes. 

  • MACD filter (slow 600, fast 100): MACD is used to filter trend and momentum. Histogram bar must grow in trend direction to confirm the entry.

  • Bollinger bands (period 20, deviation 0,6 ). Narrow BB tunnel is used to define momentum breakout signal. 

  • Size of the signal breakout candle (min 500 points, max 3000 points). Breakout candle is defined by its body size. It must close outside of BB tunnel while previous candle closed within the tunnel Breakout candle must surpass previous low/high in the direction of trend. 

  • Volumes: Tick volume measured by volumes indicator must grow on breakout candle compared to previous candle. 

  • Trailing stop (extra deviation 200 points): TS is based on broken bollinger band. Extra deviation is applied to increase the gap. TS will be the only method of position liquidation. 

 

Forex strategy rules
Apply in 1H chart of EURUSD. Use Breakout Scanner EA for automated trading. 

 

SELL

  1. MACD histogram closing below zero. MACD histogram bar closing lower than previous bar.

  2. Breakout candle closed below the bottom bollinger band, while previous candle closed within the BB channel. 

  3. Breakout candle body is of defined min/max size. Breakout candle must also close below the low of previous candle.

  4. Volumes grows on breakout candle compared to previous candle.  

  5. We enter the trade short on breakout candle close (new candle open). 

  6. We place TS at the bottom Bollinger Band and apply extra deviation to put it further from the price,

  7. We close the position once price hits the TS. 

BUY

  1. MACD histogram closing above zero. MACD histogram bar closing higher than previous bar.

  2. Breakout candle closed above the upper bollinger band, while previous candle closed within the BB channel. 

  3. Breakout candle body is of defined min/max size. Breakout candle must also close above the high of previous candle.

  4. Volumes grows on breakout candle compared to previous candle.  

  5. We enter the trade short on breakout candle close (new candle open). 

  6. We place TS at the upper Bollinger Band and apply extra deviation to put it further from the price.

  7. We close the position once price hits the TS. 
     

Get MT4 expert advisor trading this forex strategy

 

  

For best results, use this forex strategy with one of our trusted forex brokers

(STP/ECN with MT4 bridge).

To win you must trade with broker on your side.

 

 

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.

 

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