Previous Day Breakout Edge System

E/J lovely break of previous days high..

Looking at the same level, you could have applied the bull flag edge on the 5m chart for an excellent breakout/pullback setup!

Attached Image (click to enlarge)

personally i prefer to trade on a retest. example shows that i was kept out of many failed trades.
size of candle can play a part, too big, too small ......

#if trading the 1st candle break, put the odds in your favor would be the trend hh hl .........
so be selective, cannot trade every single day on high low break, look for other trending pairs in your favor.
just an opinion.

Hello guys, there is absolutely nothing wrong with using TA and FA in your trading using the system, this is something I also do - if the fundamentals are looking good, and there's a nice pattern that fits within the main rules, that for me is a high probability setup

Thanks for this strategy. I got 130 dollar profit on Micro lot in 10 days by working on different pairs with this strategy. It works great on Eurusd, GbpUsd, USA100, Gold, GBPJPY.

This is rather a sound idea.
It kind of depends on the H1 candle to lock above/below.
And i cant quite say that it matters more the any other candle, H4 or M30 for instance.
For this to work out often i guess multi billion people would have to do it on a regular basis.
Also another thought i would like to add is that TP and SL depends on the current volatility, and should not be fixed.
Im not trying to tell you how to trade, you do what you want with your money, its none of my business.
Happy trading people!

As per author i just fixed stoploss 13 pips and 20 Pip Tp for slow pairs. And for fast pairs like USA 100 and gold I am just using SL 20 pip and TP for 30 Pips. And the results are good.

Good thinking.
As long as it pretty much works out for you.

I have an indicator that can back test trades with this logic and display on a panel. With a 1:2 RR and a fixed TP/SL, the strategy is MORE than profitable. Here's the results of a few pairs over 60ish or so trades...

Hi MachineLearn. Also been looking at this strategy and have an EA built. How do you cope with for example, the days when price closes just above previous day high, by say 1 pip, and then reverses for the rest of the day? Are you using a SL at the previous day high or there about? If SL hit do you then enter a sell?

Interested in your thinking / thoughts

MAybe more rules are required and some money management (such as using a basket approach and multiple pairs to close in profit).

Regards, R

All fair questions, and I have experimented with all these concerns. I've applied a "false breakout" function that filtered setups that would breakout and immediately return above/below the breakout level. Not worth it honestly. For the slight increase in profitability, its a nightmare psychologically and just clutters up an otherwise simple and clean system.

I'm using a fixed SL and TP every time. The other variations of risk management didn't appear more profitable. It's also easier (for me at least), it keeps things nice and simple. There's no tricks or advanced money management techniques that I'm using. A Breakout alerts, I enter with a 18 pip TP and a 9 point SL, set and forget.

Every single pair over the last 60 trades from my testing has been profitable with this setup. Some just barely, and others by a wide margin. The key to this system is the 1:2 RR, and understanding that you will lose more than you win, but your wins will end up netting you profit at the end of the day. It's a hard pill to swallow for some traders but the proof is in the pudding.

I have made robots for the yesterday breakout system and the Asia breakt out system several times. The problem I've found is, that a set of parameters worked at one instrument but not on others. Also if I tested different time windows, the profit would fall. So I have never traded the system for real money.

But my take on it would be to choose the instruments on a daily basis according to how well they are doing using top/down analysis and trend analysis. For instance observing a bounce in a higher timeframe on an instrument, would make it interesting for trading. Then trade the best instruments ONLY in the trend direction. This way I believe it could be profittable in the long run.

Be aware guys, that using a firm set of pips for profit and SL should be different for different instruments as the ATR is different.

GBPCHF +2R

TP, SL and breakeven trigger based on H1 ATR(72)
Volume fixed in 0.10

edit: Plz ignore the English spelling error in the EA xD

GBPJPY
TP = 10.9
SL = 3.95
Breakeven = 2.61
Filter = false

This system is really interesting, when I have some time in a few weeks I will study it in more depth. For now, I hope the EA helps someone in the study and development process

I was trading this setup from last 3 weeks and amazingly it shows good result with 1 ratio 1.5 with Fix Tp and SL.I did 22 trades in last 3 weeks and out of 22 trades 13 trades in profit and overall 163 pips achieved. I hope this strategy will work in future.

I'm trading previous day high-low levels all my life. They are important, they are more than important (IMHO). But the problem is traders just don't know how to use them.

You can not use previous day high and low as break points, this is impossible. I'm watching those levels each day. The price will change direction between high and low several times a day, sometimes in London, sometimes in NY session,sometimes in both, sometimes even more times. And the price will usually find daily high and lows as relevant support and resistance levels. Trading between those levels should be your edge.

If the price break precious day high or low level and continue in that direction aggressively, this is to late in most cases. Let's say the price reach bottom or middle of the previous day and then reverse and go at the high break high and continue. In this scenario you miss the biggest move, from low to high.

You should try to trade inside those levels. If you think that the price will go up try to catch the lowest possible price. Of course you will need additional help from some technical tools, patterns or indicators. You need to combine them with something else.

If the price break high or low you are to late, this is my point. From another side if price start to rally like that than you don't need this levels in those conditions at the market you can use any indicator and you will be in profit, simply use any Moving average and just open trades in direction of the trend when the price touch MA. In this conditions almost every indicator works. But again, there is one problem, you are to late.

All you need to understand how the price is moving between them, use them to generate some kind of signals based on those levels will never ever work.

I think you will get better results if you will start to play with them in this way.

Just some ideas
1. If weekly candle is bearish after first two days in the week sell every time when price goes between precious day average price (middle of the high-low) and previous daily high. opposite for buy.
2. or if monthly candle is bearish after first week, sell every time when the price reach areal between previous day average price and precious day high.

Again, you should include so many variables in this formula, such as news. And of course you should work on precise entries based on some patterns. Stop loss will also play big role.

I hope this was useful.

I Guess It does not work now as it used to before like it does break the previous high/low and quicky gets back in too