Magic-Breakout (optimised) with PPA - a new beginning

Hi everyone

Well I've been threatening to start this new thread for the last couple of weeks but held back because I wanted to revise, optimise and thoroughly test it first.

OK it's actually a trading system by why put it under trading journals? Well because I want to add a trade explorer and I want to turn $200 into $20000 in 6 months. Sounds impossible? Well once you understand and start trading the system along with me you'll see it's obvious potential

Guy's I would like people to trade this system along with me and post your trades here - please!!

Anyway, let's have a look at what's behind the "magic-Breakout" strategy and also at PPA (predictive price action trading)

I'll be doing that in my next post

OK

Is there any way at all of filtering out those bad trades and ending up with a win or at least a BE? Well the good news is that now there really is!

Well you might have heard of "magic-breakout" (if you get junk mail about new forex trading systems that will make you rich overnight). I usually delete them but this one I decided to read and it was a PDF file detailing the "magic-breakout" system. Basically it uses the CCI indicator along with some MA'S. It's absolutely revolutionised the way I trade and I'm going to explain this wonderful strategy along with how I've optimised it in my next post.

PPA (prediction price action) trading is trading between set horizontal levels or "zones". A trading zone is always the 15 pip area either side of a BRN - so it's a 30 pip area which can be traded with one or more trading pairs sometimes multiple times during the trading day. The exciting thing about PPA trading is that when price action breaks out of the "zone" it will very often just reach the next zone border before bouncing up or down again back through the previous zone for a 50+ pip trade. Of course, NOTHING in forex trading is predictable but so often does price action revolve around these levels that we really can base trading decisions on this with a great chance of success.

So what we do is COMBINE these two strategies and boy it get's exciting, believe me!

Sorry I forgot to mention a third very important element.

That's the DASR (dynamic area of support and resistance) vegas tunnel which I use as an effective "barometer".

Above the DASR - only look for buy trades and below the DASR - only look for sell trades

Let's have a look at the EURUSD 4 hour chart - note how neatly price action bounced off the 4 hr DASR line upwards - hit the 3100 "zone" area and bounced down for 185 pips - eventually going through the 2900 zone (always PPA!)

Hi looks good what about a template and some definate rules?

Hi Stumpy1

Thanks for your input.

Everything will be revealed over the next couple of days. A lot more on PPA and of course Magic - Breakout (optimised)

i wish you the best

Thanks for the post's everyone.

Really enjoy any input - even (helpful) criticism!

Well it's simply amazing how often price action sticks to our PPA parameters. Those who are awake during the Asian session could have bagged 80 to 90 pips last night. What am I talking about?? Well,remember I said that PPA revolves around trading "zones". A zone is the 15 pip area either side of a BRN (big round number). Now I'm not going to post hundreds of charts showing how many times price action respects the "zone". It's an exercise one can do by simply checking the charts (EU, EJ, GU are the better ones) over the last few days, weeks, months!

In fact price action often sweeps backwards and forwards through the zone right to the boundaries a number of times. Why? Well I call it "sweep" because it's probably the MM's constantly sweeping up retail trader's SL's and PT's.

I have posted a EURUSD 15 min chart from last night. It shows no less then 3 "sweeps"!

Note how price action nicely jumped from the 2900 zone to the boundary of the 2950 zone. It has stalled at the 2950 zone. What I often wait is for it to break through and hit the BRN (in this case 2950). Then wait for a retrace to the boundary area before entering to trade that particular zone.

NB: Nothing is written in stone with forex trading. It certainly doesn't always stick to the rules - but what I'm saying is that it does MORE OFTEN THEN NOT which is what we're looking for!

How to trade PPA

Firstly, we are more likely to get "sweep" around a significant support/resistance BRN level. In this case it was 2900

Using a 10 pip SL, one can simply trade the zone boundaries.

Once a significant breakout occurs, one can trade it UP TO THE NEXT ZONE.
In today's case, (so far) we could have bought around 2920/25 up to 2935. It's 10 pips - not much but I never moan about a 10 pip gain!

NB: Because we are BELOW the 4 hr DASR line (vegas tunnel) we cannot be certain of a sweep or through trade through the 2950 zone. That's where our Magic-breakout (optimised) strategy kicks in!

Hi everyone

Firstly I have a confession to make. I was forex trading's first idiot when it came to looking at short time frames for direction. Setting a pending trade by only using short time frames is a fatal mistake. In fact I would most definitely NOT recommend pending stop trades at any time. Limit trades - yes - if one is trading PPA because as we've discussed in previous posts, one has a good chance of success ESPECIALLY if the limit trade is in the direction of the prevailing trend!

Anyway, as I said, a few weeks ago I received that information on the "magic-breakout" trading strategy. To be honest, I didn't like it at first mainly because the settings were (in my humble opinion) not very good. However the strategy is great. Why? Well because using the CCI indicator as a FILTER is a really sensational idea. You know, to succeed in forex trading is not making good trades but AVOIDING BAD TRADES!

So how does it work? Well the great thing is that one can be aggressive by using the lower time frames or if you want to be really conservative and careful you can opt for the 4 hr chart.

Here are the indi's you need: vegas currency daily, entry (not necessary), gridbuilder, PP levels

I use a more simplified uncluttered template for the 4 hr chart and a more detailed template for the lower time frames showing Pivot levels as well.

So what we are doing here is setting up the MB system in a slightly different way.

We're using the vegas currency daily as guide to trend direction

We are using the CCI indi (set to 24)


OK so we have our indis's and template. But how to READ the signal and use it is the KEY!!


And we'll be looking at that in much more detail (with charts) this evening

Hi everyone

Especially to the 10 or 11 traders who have downloaded our template.

OK so how do we trade Magic-breakout (optimised) with PPA?

Well as I said, the GREAT thing about this system is that we can trade it on ANY time frame chart. The lower the time frame the more trading opportunities but a (usually) proportionately lower pip-haul. Of course with the lower time frames like 5 or 15 min we have to be quick to enter immediately on break of the 100 level as overbought/oversold can occur at any time afterwards.

First let's look at the RULES. What we are looking at is the signal line on the CCI (24) indicator

1/ We don't trade when the line is BETWEEN THE 100 LEVELS (shaded in red).

2/ We CLOSE OUT our trade whenever the PEAK is reached. The CCI accurately shows overbought/oversold situations on whatever time frame chart we are trading. We then WAIT until the line goes back under the 100 level and then eventually re-appears to break the 100 level at a new break-out.

On the 4hr chart below, the no trade area is shaded. The trade entry point is whenever price action starts breaking through the 100 level or starts rising/falling again if it's above or below the 100 levels. CLOSE THE TRADE as soon as the peak is reached (circled in white).

If we stick to the 4 hr chart it may be a day or 2 before the line breaks through the 100 level again. But when it does, it can often result in a BIG pip-haul. We will also have avoided trading MANY false break-outs!!

OK

Let's look at some examples.

By the way, what you MUST do is compare your losing trades with what decision you would make NOW if you had been trading this system. Well I can tell you I that would be sitting with at least $5000 more! I have found at least 20 trades that I would never have thought of taking with this system!!

Anyway let's look at a few examples in the next few posts.

Let's firstly look at GBPUSD today.

The 4hr chart shows NO TRADE. It peaked out last Friday morning and has been showing 4hr oversold since then.

The 15 min chart No less then 5 WINNING opportunities since 8.15 am this morning. Last peak at around 1.15pm/1.30pm since then showing overbought - NO TRADE

You can see why I use pivot levels on the lower time frame template (price action today was well above PP) - also I show the 4hr chart DASR line at around 6051 which made the buy at that level a pretty sure bet!

Really sorry everyone!

I have only been trading this for just over a week and even I have not fully explored the power of this system

The CCI (24) along with the vegas tunnel is an incredible breakthrough - It was simply by chance that I put these two things together and it's just amazing how easy this game can be when one has got the right tools!!


Anyway just take a look at the GBPUSD 5 min chart from yesterday's European sessions. I have been a bit wary of using this system on 5 min charts and yet why not? 3 clear and straightforward signals for a cool 50 pips - what more do you need? Note that after 1.30pm the 5min became overbought - signal to close the trade and yet the price did rise a bit more. We can either check out the 15 min or 30 min chart at that time to see if THEIR SIGNAL is still valid or use PPA to close our trade!



P.S. : Anyone is welcome to add signals to the thread. The system works on all the pairs!

Took couple of trades today on my live account with your system, and got 15 pips. Not bad at all. System seems to work very well.
I normally scalp using CHOROS method and this one seems to complement it very well. It should help my exits.
Thank you.

Really great IamThat

Even better if you can share them with us next time!

Well done anyway

Guys as I mentioned, it's not just about taking trades at the right time but NOT TAKING ANY TRADES AT THE WRONG TIME that really makes this system absolutely wonderful in my view!

Here is the GBPUSD 15 min chart - as one can see, no trade this morning - signal has been inside the "no trade area" since 3.30am - but if we get a spurt upwards and the signal line again reappears above the 100 level we'll be ready!

The original magic breakout strategy rule states then when the signal line returns below the 100 level, there must be at least 5 candle bars before the next breakout - I don't stick to that but one can!

Hi everyone

OK!

Let's go back to GBPUSD and have another look at the 15 min chart (actually cable suits this system because it has a nice "breakout" mentality!)

As you can see, we had two lovely breakouts both of which would have resulted in a few pips! One around 11.30pm and another around 13.45pm. When the move becomes temporarily overbought, the CCI clearly shows it - ESPECIALLY ON THE LOWER TIME FRAMES - which gives us time to TP and re-enter on the next breakout

Now remember we were talking about the PPA (predictive price action) zone? That is the area 15 pips either side of the BRN. Well see how perfectly the price action respected the "zone" so far today!

OK let's look at EURUSD on the 15 min


BTW, if you are only trading this system on the 4 hr chart, (quite acceptable!!) you would have no trade so far today as the signal line is still within the -100 and +100 levels



On the 15 min chart though, we had 2 nice breakout signals. I did trade the second one for a nice 20 pips!


Note how after 12.00pm the 15 min has shown overbought which really was OK - shielded us from a lot of "nowhere" movement ever since!!

Hi Jmtini,
I have looked at price action around BRN's also.
In your second post you talk of trading between the top and bottom of the zone.
Here is an example of how I am looking at trading from one zone to the next.
Basically a break out of the zone with entry on the first pull back to the zone.
The first chart is a live trade from yesterday Asian session to today.
Entered with 4 units, took partial profit at different levels, the last being just above the next BRN.
The second trade I entered about 45 minutes ago with 4 units on a pullback after a break out.
Sorry the charts are not your template.
I do not want to take away from your system.
Just wanted to open up another frame of thought for your methods.
You have given me some new thoughts.

Thanks

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[quote=krmo;6283170]Hi Jmtini,
I have looked at price action around BRN's also.
In your second post you talk of trading between the top and bottom of the zone.
Here is an example of how I am looking at trading from one zone to the next.
Basically a break out of the zone with entry on the first pull back to the zone.
The first chart is a live trade from yesterday Asian session to today.
Entered with 4 units, took partial profit at different levels, the last being just above the next BRN.
The second trade I entered about 45 minutes ago with 4 units on a pullback after a break out.
Sorry the charts are not your template.
I do not want to take away from your system.
Just wanted to open up another frame of thought for your methods.
You have given me some new thoughts.

Thanks


Hi krmo

I see exactly what you're talking about.I must say that I love PPA trading - really great to have an idea where price is heading and being able to plan accordingly! Looking especially at AUDUSD (at around 11.30 am and again at 5.00pm) it's quite true that price action came back to test the "zone" area before rising up to the next zone. Thanks for that - I'm going to keep an eye for that in trading it in the future!

Great to see how the 5 min Magic-Breakout (optimised) chart shows clearly the breakout trading opportunities What was also very nice is that the CCI indicated a virtual "no trade" period from 8.00am until 11.30am when PA was going nowhere