New Variation on 7 am to 9 am Breakout Strategy

Alright. It was suggested that I start this thread because the original dynamics of my system changed basically the entire trading system that I was originally posting on which was the 7 am to 9 am big dog breakout strategy. A good amount of the information that I will put in this thread will be taken from posts I made in that thread (which by the way is a pretty good strategy, just not quite for me). This is a more conservative trading strategy than a lot of the other strategies on here and has a pretty nice risk to reward ratio, which is 3:5 risk/reward. What I've learned from my trading is to keep risk low, reward high, and stick to your rules once you have them set. And with that, I'm going to post the rules for my system. If you have any questions, make sure to ask them and I will answer them best I can.

I always trade EUR/USD. Feel free to test it with other USD pairs, but I have not tested them. If you do test them, please post your results here for everyone else to see.

So, here is what you need:
2 vertical lines
- One at 7:00 a.m. ET
- One at 9:00 a.m. ET

2 horizontal lines
- One at the highest point between 7 and 9
- One at the lowest point between 7 and 9

Fibonacci
- 0.000 at the high point between 7 and 9 and 1.000 at the low
- 1.000 at the high point between 7 and 9 and 0.000 at the low
- The fibs that you should have set up for each of these are 0.000, 1.000, 1.272, 1.500, 1.764, and 2.000

Now, the fibs will show you where to enter and exit your trades. You'll want to set Entry Orders at 1.272. You'll want to divide your trades up into thirds. The stop for each trade is going to be the 1.000 fib line. You'll have three limits set up, one for each third of your trade. Take profit on one third at 1.500, take profit again on another third at 1.764, and take profit on the rest of the trade at 2.000. For the SL, move them up to break even as soon as the first TP is hit, then move them to the first TP line when the second TP is hit to make sure that you lock in some profit.

Now you'll se up these trades in both directions right at 9 a.m. ET. If the long trades are hit, cancel the short orders. In the same way, cancel the long trades when the short orders are hit.

Last thing I would like to say is that this strategy does not bank an extremely high number of pips. This is for people that want to trade conservatively and use higher lot sizes to lock in their profits eary.

I hope this makes sense. This is the first time I've just tried to explain it all in one post, so if you have any questions at all, let me know. I'm attaching a picture of the first "live" trade that I made, which was last Wednesday (5/20). Since that day, I've had 4 wins, 1 break even, and 1 loss. (Didn't trade memorial day). I know that there are some others on here who have started to trade this method, and I would appreciate it if some of you could post some of your personal results using this. Anyways, think I'm done...

Been following this method recently.

Reg. lots, I do it slightly differently.

If I trade 10 minis, I use 5 for TP1, 3 for TP2 and 2 for TP3.

Lucas,
You have already answered these questions in the other thread, but for clarity, if you don't mind, please post them here as well.

1)What time do you remove pending orders if they are not triggered?
2)What major announcements would make you not place pending orders at 9 ET? Like FOMC, NFP etc.

Good call. I like the idea. I might start doing that. Would've made a higher profit on Tuesday if I would've done it that way.

1. If neither the long nor short has been hit by 4 or 5 pm ET, I cancel the pending orders. I let them slide for a while because when I did my backtest, there were a couple that would trigger at 2 to 3 pm.
2. So far I have not found any specific announcements that would keep me from placing a pending order because there are days that the announcements seem to help. If it is ranging during those hours one of the announcements usually causes it to break out in one direction or another.

Hope that answered them for you.

This is my trade from 5/21. The first picture shows the pending orders as set up in FXCM which is who I trade through. The second picture shows after the long order was triggered and the stops were hit. I cancelled the short orders as soon as my long orders were triggered.

Do you trade fridays?

I did last week and it was my only loss. I'm going to trade again tomorrow and see if it's the same results.

If you add these levels to your fibs along with the ones you have in the first post, you won't have to pull two fibs. It will show the same levels no matter which way you pull them.

Level Description

-.272 1.272 %$

-.500 1.500 %$

-.764 1.764 %$

-1.00 2.000 %$

http://i86.photobucket.com/albums/k1...71898/fibs.gif

Unfortunately on Marketscope, which comes with FXCM, there isn't an option to add negative fibs... If there is I'm missing it, but it doesn't accept the - sign.

First time for me...all 3 TP's in profit for +66 pips on live account with Oanda. Thanks, Lucas!

Hey mer071898,

As the old joke goes, I could have used that info, yesterday! I spent a coupla hours figuring that out on my own earlier this morning. LOL

Seriously, that is a very nice enhancement to the fib tool.

Good trading!

Awesome. Glad it worked out for you. Last week Friday didn't work too well for me so I'm trying it again tomorrow before I start doubting whether or not it will work.

I have a question, when you initially buy/sell where do you put your initial stop loss? At the high/low of the 7am-9am breakout that got broken? Also, I have been backtesting a little on the GBP/JPY and it seems to also do very well(what can I say, I like risk).

If you look at the image, it's at the high from the 7 am to 9 am box for the long trades, or the low for the short trades. I looked at the GBP/JPY and just decided to leave it alone. Good luck though and let me know how it works out if you start trading it live.

Looks like GBP/JPY Sell trade was filled on IBFX @154.03, but only moved 12 pips positive before retracing and hitting the SL, today.

My recommendation would be to stick with EUR/USD with Lucas. He already has a positive track record. That's what I'm doing until we can determine other pairs that show promise.

Good trading!

OK, I see it now. This does have a really nice rick:reward component. I will track GBP/JPY for a week or two and if it is still successful I will trade both the EUR/USD and GBP/JPY live. I will let you know the results.

Hi Luca, so is this Friday (29th May) only your 2nd Friday of ever trading this method?......and you can guess whats coming....how long have you been trading your version of the breakout? Thanks

I think you are right I also use fxcm, don't think the platform allows negative fibs. By the way good strat wonder how well it would work on GU

This is my second Friday live. When I backtested, I didn't keep track of the specific days, just the totals of wins/losses/breakevens. I was trying not to curve-fit it. I have been trading live for a little less than two weeks with this system.

Not sure about the GU. Not nearly enough time for me to backtest it or even trade with my demo account. If you get the time to, let me know how it works.