Anyone got any good breakout systems? I'm looking to test a few.
Thanks.
Thanks.
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DislikedSeveral in trading systems. Big Dog breakout, 4-7 GMT breakout, 4H box breakout, 4H custom stop loss breakout, literally hundreds of variations of the same idea. There is an interesting one that uses trendlines and the start of the new day EST that looks promising.Ignored
DislikedI suggest you read up on Turtle Trading. Not limited to FX, but one of the classic breakout systems and well documented in a couple of books.Ignored
or combinations of the two.
There is a myriad of approaches, like trading breakouts from the Asian session, weekly breakouts, H4 breakouts, higher/lower close of candle on any timeframe, assisted by other indicators or not etc.
Breakout systems tend to be very mechanical, and that can leave problems if price action behaves differently in, say, one Asian session than the last one. They need to be mechanized, however, becuase it is all about sticking to the rules in order not to dilute the statistical edge of the system. That, to me, is one of the essential lessons from the Turtle experiment.
For statistical normalization to work I think it is better to look at longer timeframes, at least D1 for session based breakouts. Problem with FX of course is that the daily candles start and end at different times depending on the broker location.
For support/resistance breaks, look at Donchian channels for a conventional approach or for the price to ride (in other words: not reverse at) the Bollinger Bands for something unconventional. Donchian draws you a rigid line, whereas the Bollinger Bands adjust for market volatility.
And to throw just one more in, the Cloud (Kumo) in Ichimoku Kinkyo-hyo charts is a dynamically adjusting support/resistance zone that takes into account momentum and volatility. Combined with the other elements of Ichimoku you actually get a base system, rather than just an indicator, without putting too much color on your charts. This can be traded as a breakout system on multiple timeframes if you enter when price goes through the cloud.