3-10 bar breakout

Hi all,

here's an idea I've been playing with to try and have a completely automatic discretion free strategy to supplement other methods when time is a little tight.
The entries are straightforward and will throw you into a high probability position in line with the current momentum. The exits are more difficult to systemise although I'm using a simple method which is giving positive expectancy at the moment.

Time frame: 4 hours, simple barchart and 3-10-16 macd
To define current momentum, I'm looking at the crossing of the zero line of the 3-10 line - that's the blue line on my chart. If it goes positive I'm looking to buy the next high, and if it goes negative I look to sell the next low. That's it.

The chart shows the entries for July, there are 9. Using the TP parameters below there are 8 winners and a live trade still over the weekend. Going back a few months the worst period seemed to be early June with 4 losers in a row, but it seems to be averaging around 90 pips a week. Obviously July was an exceptional month for this strategy.

To keep it disciplined I'm using a take profit of 80 pips (on GBPUSD - I'm not looking at any others) and a stop of 80 to give a simple R:R of 1:1, so it's relying on more winners than losers. 80 seems a good compromise figure although many runs go on to make several hundred, but I'm looking at using the ATR for this also. However, as it stands it is working and I've started to use it to free up time when I am unable to spend longer looking at charts.

The trouble I'm having in modifying the exits is that it starts moving away from the maintenance free system I'm after. I wanted to throw this idea out there as the basic idea seems quite robust as long as there is volitility to drive some movement, and it works on the basic premise of selling weakness and buying strength. Have fun.

hey knssos,

looks nice. i am currently looking at a similar system. in addition i use the "support and resistance" inidactor as a filter and 11-12-11 macd

when a S/R line is broken and 2-3 "sticks" of the macd cross the zero line I trade

adx 14 CAN be used as another filter, but i am still experimenting (when above 20 or 25 a trend can come up or so)...

as you said the exit is hard to define. at the moment I take profit at 20 pips and use trailing stops...

I tested 15min and 1h charts of Eur/Usd and Gbp/Usd...


here`s a EU 15min chart and the indi:

on your entry do you use any buffer?
for example it must make a new high by 10 pips to enter?

or do you enter if it exceeds recent high by 1 pip?

Thanks

At the moment I'm allowing a couple of pips buffer - sometimes there's a false break and a buffer of 10 would keep you out but it seems more often than not it'll run for a bit as long as you have recent momentum on your side. I must admit I'm not too precise - just drag an order onto the chart and clear the high/low by a little bit

labphoenix, those ideas look good too - I'm sticking with the 3-10-16 for now as I do my discretionary stuff using that too and it seems to work ok. The principle seems similar and I'm sure that's the robust bit of the idea. I do think it's important though to stick to one idea - in the past I have been chopped around many times because what i was doing threw up a few false entries and then i would miss the string of successful ones. It's like a big game of swings and roundabouts.

Knossos, keep posting your trades, looks to easy..

Danny

knossos
remind me how you are getting the blue line on your macd indicator
i dont think it is the standard MT4 macd
I downloaded a couple of custom macd's but could not recreate what you call the "3-10" line

maybe I am missing something obvious.

Thanks

I just realised the actual mt4 indicator is one called macd(2) - I'm not sure why but the standard one doesn't give these options which seem pretty standard elsewhere. I'm just using 3 and 10 for the fast and slow ma period, and 16 for the signal ma. I've coloured them blue, red and black in that order. I'll attach the indicator below but it's what I know as a basic macd using emas.

It is similar to the one Linda Bradford Rashcke uses as well as Chick Goslin, and it is their ideas I have primarily adapted for my own, but this is trying to make the process more automatic.

I will of course post more entries as they turn up but they are easy to see for yourselves. I'm on an extended trip from Tuesday for 5 weeks in Australia so I will be disappearing for a while but it would be interesting to see how people adapt this method and take it further.

rebelheart, it does seem quite easy, but of course any method will under the right conditions. This needs volatility to thrive, choppiness will start to eat it up but I've found in the past that playing about with too many filters is counter productive. Best bet seems to be hop on when you get a signal and it'll either go your way or it won't. Simples

Knossos, I will want to follow your idea(s) and
any further developments. Also I will participate
if any questions or possible contribution I can make.

All the best,

RR

Cheers for the input guys.

Just a reminder, we have a live one on still over the weekend - number 9 from the chart above, short around 1.6428. We'll see how that one goes as we move into Monday.

Well that was the first one down for a while, another just triggered long at 1.6490.

Well not so many signals and for sure half of them when i sleep

i wonder if it is possible to go down in time or trade more pairs to get more signals ?


best regards

Just looking at the GB/US today, there was some nice set up's using the macd..

Danny