My Breakout Strategy

We all know a 100% winning holy grail system is very unlikely to come across, unless your aiming for a very small amount of pips with a huge stoploss that can withstand months even years of the target to get hit.

So I want to start of by explaining that this is not a 100% profitable system, but 89% of the days traded over a 3 month period produced positive pips.
The average daily pips profit including losses was (31pips a day).

With this averaging me pip profits each day, its my closest strategy to a holy grail. So why not share it!!

THE STRATEGY
This system is based of a really simple breakout concept thats broken down into 3 times a day to set buy/sell orders. this can produce anywhere from 2-6 open positions depending on market volatility, ranges or trending days.

Example of this powerfull range breakout strategy on the DE30 (DAX)

1.We identify a range based over a set of hours each day or 1x1h candle.
2.Set buy and sell orders at the top of each range
3. TP is always 20 pips, SL is always 50 pips
4. Set an opposite order at the bottom of our 50 pips SL (only if order is opened) this is to recover our loss.
5. The recovery TP is always 50 pips with SL 50 pips
6. Close all positions when next orders are set

PART 1+2/3
Market: DE30 (DAX)
Range 1: 1:00-9:00(GMT+1)
Range 2: 12:00-13:00(GMT+1)
Range 1: Once we have identified our high and low during 1:00-9:00(GMT+1), we will set a buy order at the top and a sell order at the bottom of the range.
In this example above we broke out of the range and TP was cleared (we could have taken more profit but we are trying to only target 20pips each trade for consistency)

Range 2: This range is the high and low of the 12h candle, again we repeat the above process. Buy order at top and sell order at bottom. TP always 20 pips
This time we do not place a recovery trade if out SL is hit, its very rare that the 12h candle is larger that 50 pips so we just set our SL to the high/low and let the opposite trade open to recover 20 pips towards any losses.


Recovery positions if SL is hit: all trades during this range have a 50 Pip SL, once an order is opened we set an opposite position where our SL for the current open trade is. The TP this time is 50pips with a 50pip SL. This recovers any losses from the previous trade. YES!! there will be days when we lose both trades and end up with a 100 pip loss (this is very rare, as explained earlier 89% of days end with profit and with these losses taken into account we still average a +30 pip a day)

Attached images above show a recovered position and a red day where all positions end with a loss (But we accept that, this is trading after all!!)
Sometimes we get a recovery positions that wins us the 50pips that we lost then opens the breakout position for 20 pips, leaving is +20 for the first slot of trades.

PART 3/3
Market: NAS100 (NASDAQ)
Range 3: 8:00-15:00(GMT+1)


Range 3: This is a identical copy of the DE30 range 1 trades. Identified our high and low during 8:00-15:00(GMT+1), we will set a buy order at the top and a sell order at the bottom of the range.


Recovery positions if SL is hit: (Repeat range 1 recovery plan) all trades during this range have a 50 Pip SL, once an order is opened we set an opposite position where our SL for the current open trade is. The TP this time is 50pips with a 50pip SL. This recovers any losses from the previous trade.


Of course there are going to be manual adjustments which are learnt as you trade a system, just one example is if we don't have a position open during the 1st range and one opens during the 2nd range breakout where the TP is in the middle of where the 1st range breakout TP would be, we could always extend the open positions TP to match the 1st positions

I hope you all enjoy this post as much as I have trading it, its the first system that i have a lot of faith in.
My favourite part about it is the simplicity, you don't need to watch the screen for hours on end.

1.Set an alarm on your phone 10 minutes before range hours close, draw your range from high and lows, set orders.
2.Wait for an alert then one has been opened.
3.Place recovery trade if its during ranges 1 or 3.
4.Enjoy your day, get of with your life and leave the market to do the rest.

Thanks, RenkoBuddy

Thanks for the reply.
I have traded the London open strategy before and noticed the same 8:00(GMT+1) spike candle. For that reason my ranges that I pull my highs and lows end at 9:00(GMT+1) for the DAX and 15:00(GMT+1) for NASDAQ. This eliminates the spikes found on open both at 8:00am and 14:30 (US open).

Im not trading this with forex pairs due to spikes being more frequent, this is developed with indices in mind.

Please explain more why this makes you cringe. If we are playing a system thats exploiting a probability of something completing 9/10. why would you not trade that edge you have. Greed is what has historically burnt accounts for me rather then booking my profit. So this works in my favour. As for drawdown, this is being traded live and so far i'm not seeing an issue with it. Maybe because the markets have been working well with this system. Over my backtesting i'm not seeing a multiple day losing streak (Not saying there wont be one, but the losses are outweighed by the wins)

If you look through my post I actually point out days where the system fails and shows how this can lose on all positions, but thanks for your concern.

Yep I have renko system that i'm trading on the side which is working nicely for me, I stepped back from that idea I posted and moved onto a nice swing trading renko system on the DAX

I accept feedback but sounds like you felt a bit personal about this. If you wanted to give some better advice on how to better this, instead of where I have failed to recognise an advantage. It would have been appreciated more.

Just to question this in one of your posts, I know you talk about the maths behind price movements from highs and lows (found very interesting btw).
Does this not come across condescending when you 'cringe' at the idea of only taking 20 pips from a move over and over?

By only targeting a small amount of pips (20) with a SL 2.5x the TP size. Could you not see the potential profit form spikes because the TP is cleared before the reversal. As you probably know, when we identify a range we have 3 outcomes; 1. Stay within the range, 2. Break out and move away from the range 3. Break out to reverse back into the range(fakeout).

When trading both the DAX and NASNAQ we have a ATR daily range over 100. A 20 pip target is going to be cleared the majority of 2/3 outcomes above (ignoring staying in a range, wouldn't open any positions)

There are a handful of members on here to trade indicies, should they not be allowed to then?

Thats good then, pushes you towards your results. But just because you have a method that works for you. Doesn't mean someone else's idea wont work for them.

Are your losses not classed as a drawdown for you then?

Why did you move away from equities if you were achieving 1 loss over 3 years.
From trading them in the past you should know that liquidity and volatility is at its highest during the opening hours for indices. This is what the system is exploiting, by consistently taking a small section of the moves that happen within that timeframe.

If we trade this for 20pips with a RR or 2:1 or above then probability of the TP being cleared will reduce, making this system pointless. From how you are replying this will be pointless for you to. But the recovery trades for when the SL is hit recovers any losses the majority of times. eliminating the large losses that would occur if we didn't have them in place. So far over the past two weeks of live trading, we haven't seen a day that ended with negative pips on the day. I think 80% of traders who are winning then take a large loss which wipes all profits and remaining capital (or losing every week) would be happy with a system that is producing these results. Yes its amazing to make 100-200 pips in a day but personality I would rather take an average consistent amount every day.

Thanks for taking your time to review this post, i do appreciate the information you have given. I will be updating this thread with what happened at the end of each day traded. Feel free to check in a see how it plans out for me.

24/08/20 Update:
Added a 4th breakout area taken from the high and low of the 6:00-7:00(GMT+1) candle. TP 20.

Rules: buy/sell orders on high and low. Either close with TP or manual close at 7:58 If TP hasn’t cleared to avoid any spikes that might occur during the EU opening.


1st trade: DE30, 7am breakout. Cleared +20
2nd trade: DE30, 9am range breakout. Cleared +20

Daily total @ 10:50: +40

Waiting until 12:55 to identify 12:00 hour candle for next breakout trade, and final set up at 14:55 for NASDAQ 15:00 breakout trade.

Hi, I trade the indices. Only nasdaq and sp. I recommend that you try to create an expert advisor, as the rules are completely mechanical. You would have the "certainty "that the strategy is profitable

Thanks for the reply. I’m currently learning python and mql4 at the moment. Just trying to get the basic syntax understood before I can start developing experts.

Do you know any good sites/forums that could help with this?

it’s only a few rules that need to be coded for this to work, but I’m guessing it best to understand the whole mql4 documentation to get better results

Yes, the official mql5 site. You can also hire a freelancer, it will cost you little, because they are very simple rules

https://www.youtube.com/user/Jimdandy1958

I have an EA ive created that may help with your quest, it can read a range of candles and present two horizontal lines on the high low or range of candles, then trade the breakout, either with a fixed TP/SL and/or trailing stop.

Here is the EA, you can adjust the parameters.

SR Shift = one candle back from current candle, it has to be like this as cannot read the range of an active candle
SR Interval = the range of candles you wish the EA to draw the Support Resitance



If you wanted just the Hour candle breakout at a specific time then just go to an hour chart and set the SR Shift to 1 and the SR Interval to 1, it will then read the previous candles High Low.

The settings in the screenshot are for GBP/USD 5min chart Breakout, it will read the range from 12pm (Midnight) GMT through til 6am GMT, and then only begin trading at 7am,waiting for a breakout, my Broker is GMT+2 hence the 9am start time in the settings.

Ive added a template and a useful vertical line indicator to show the times of range and trading.

Hi Renko, I would like to say that this strategy looks so profitable, i have an opinion about it, what about scalping with this strategy, I mean try to take only 5 pips with 10 dollars for 1 pip, I would be easier to take the profit, what do you think?

you say 5 pips with 10usd for 1 pip mean volume size 1 ???

I tested this strategy with a TP of 30 points, which is not bad in principle...

Hi Renko, very interesting strategy indeed. Any update on the EA? My line of work doesn’t let me check in at the designated times, only first thing in the morning and then in the evening. Thanks in advance

Hi Renko ;-)

I've come across your approach of DAX open strategy and it looks very interesting and promising to me. I've started backtesting a bit with Forex Tester and if it turns out to me that is't a consistently profitabe strategy I'll probably make an MQL4 implementation.

One question if I don't bother too much:
for DAX 1:00-9:00 and 12:00-13:00 range trades, at which time (GMT+1) do you close running trades and delete pending orders?
Same question for Nasdaq 100 8:00-15:00 range trades.

Haven't found an answer in the whole thread but maybe I've missed it ;-)

Thanks in advance.

Cheers
Michael
Vienna/Austria

Hi,

I can't send you PM, probably because you are new at FF?

I read your response on this topic. I am a very experienced trader and know a lot about system trading. I have devised many systems myself and looked at systems of others and adapted them as needed if necessary. Unfortunately I can not program myself. The system is really promising even if the RiskReward is of course completely wrong with accepting a TakeProfit of only 20 pips against 50 pips loss. But...... who knows? I should back test at least 100 trades or do it manually with MT4's strategy tester. I think it is promising, have been watching for a few days quickly and it goes well more often than not. I mainly focus on the DAX index on the 1M timeframe. Nasdaq is fine too. I use the times as indicated but I do not use the 6.00 - 7.00 which he added later. This time range actually makes no sense, sorry Topic starter.... . I now use the first range from 1.00 - 9.00 for the DAX and the second range between 12.00 - 13.00 European time (Amsterdam). 1 hour later than London. I also use 20 TP and 50 SL as directed and all other directions for the recovery trades and more.

You asked this in the topic .......
One question if I don't bother too much:
for DAX 1: 00-9: 00 and 12: 00-13: 00 range trades, at which time (GMT + 1) do you close running trades and delete pending orders?
Same question for Nasdaq 100 8: 00-15: 00 range trades. "

I don't think you should close pending trades at a specific time. The same for pending orders. I am not sure too. Perhaps before the second range of the DAX starts at 12 noon or not until 1 pm before it becomes really active, you should close the active position from (the first range) earlier? I hope that the google translation from Dutch to English is understandable for you ........
I definitely want to give this strategy a chance. I've been working on this strategy for a while, it won't let me go!

Regards,
Luvene