retrace/breakout system

Here is a simple and common breakout system that might work well on some pairs in an EA, if anyone is willing to code it. This system trades breakouts, but only after a retrace in price, which is common. One downside is that this system will miss moves that do not retrace after a breakout, but retraces are more common than not. If anyone knows of an EA similar to this, I am interested in testing it. Thanks.

The adjustable parameters a-e need to be optimized for each pair depending on the chosen timeframe.

Establish a basic aBar price channel


Entries: Enter long on next open if (1) a close is above the aBar channel and (2) price hits a new bBar low within cBars of the breakout. Enter short on the opposite. No multiple entries allowed.


Stops: Initially % of account, then move stop to breakeven when price moves dATR in profit.


Exit: Exit long on the close if the current high is greater than the highest high for the previous eBars. Opposite for short.

Optional to only trade long/short signals.

nomoretoxic's breakout thread does what you're talking about

Thanks, I will check it out and your generic EA. At first glance, it looks different -- I don't know about that whole box thing. The market breaks when it breaks, then comes the retrace. With this system, you should bank profit on retraces at various times after breakouts. If it does not retrace, then we just wait for the next setup.

Here is an example of a setup with this system:

The box is the breakout range. Using nomoretoxic's system, you don't trade the initial breakout, you trade the 2nd breakout, just like your system.

My Genericbreakout series does not enter on retracements, it takes the initial breakout.

Ronald, Yes, it looks like the same system, although I prefer longer timeframes. But the setup for a trade is essentially the same.

I like the simplicity and flexibility of the generic EA! I am not so great at following code -- does the breakout buffer set how many pips it must break outside of the range to execute a trade? Also, if eachtick mode is set to false, will the EA wait for a close to execute (looks like it)? Does each tick mode affect the calculation of the range? Sorry for all the questions; please bear with me.

I don't want to spoil the simiplicity of your EA (or its expectancy), but have you considered adding a pullback function? Thanks!

I am reading through the bigdog breakout thread now -- looks like that answers some of my questions. See, I am not that lazy...

1. Yes
2. Close of the bar.
3. No
4. How? I'm not sure how to put in a relatively reliable pullback function.

Enter long on next open after (1) a close is above the xBar channel (or box) and (2) price hits a new yBar low within zBars of the breakout. We are just coding to find a new low within zBars after the break long....

So, for example. If we set x to 10, y to 4 and z to 8, we will have high/low price channel based on the past 10 bars. If price closes above the 10 bar channel, the EA will not go long unit price hits a new four bar low within eight bars of the breakout bar. All parameters and timeframes are adjustable like you prefer. With the correct parameters, you could run this on M1 or the daily.

Hi Ronald, The system will create a long entry at the open of the next bar if the close exceeds the upper channel, AND within the preset retracement period (e.g., 10 bars) the current low after the breakout qualifies as a new low. A new low qualifies if the current low is lower than any previous low for the number of preset new low bars (e.g., 4 bars). Make sense?

Here is another example. Note how the retrace would or would not qualify for a short entry depending upon the settings. This setup happens all the time. Take a look.

Just to be fair, using the above settings, this cable trade would have been a loss. Using 10 bars for a retracement period might be too generous on some pairs.

Do we know how it's done with the indicator in nomoretoxic's thread? I suspect they aren't using local ranges.

I am not certain, but I will take a look.

The box appears to be fixed in time (2 hours wide for a five minute chart) with a border on primary S/R levels in first 3/4 of the chart. So, yes, it is different than a price channel breakout (like a turtle). I don't know if the box indicator is better or worse than a price channel for finding a breakout, but they are both based on raw price, which is good imo. I suspect that if you layover a price channel with an appropriate period on the box, the breakouts will roughly match. I might try that, although five minute action is too quick for my blood.

Timing a breakout is likely less important than timing the entry on retrace and the exit. Here is a basic price channel indicator in FF.

Ronald, I swear, every time you post to this rookie thread, its read count goes up another 50. I think you make trends.

Here is the last setup on the Euro daily per the above settings. I know this is simple, but it looks to work if you stick to the rules and do not deviate. It is easy enough to try live on the daily. I might give it a go after further analysis. I like the exit strategy. Am I missing anything?

What if you were able to use generic breakout version 7 by ronald raygun ans it has a function for when the the box had breakout that you could set the amount of pips behind the breakout for a pending order? Ex: 1.10000 is the bottom of the breakout box so when the price hits 1.09990 and your setting for the retrace was 300 then it would just setup pending order to sell at 1.10290? vise versa for breakout at top of box. Is this possible to do for code?