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Box Breakout indicator 196 replies

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4H Box Breakout

Quoting yen44x
It's a reference to Shakespeare's Hamlet "To BE or not to BE, that is the question".

Sorry, it actually refers to Breakeven.
hehe is good to know, that Hamlet all the time was thinking about pips :-D
" To TP4 or not TP4, that is the question"
hey guys the first of all I want to thank the guy who have start this thread and shared with us this system, although I'm more discretionare trader I like this system it feets great to me.

I think that this is 75% mechanical and 25% common sens,thouse 25% come from your experience and your feelings about the market.

I have read only the first 10 page or so but from the 1st post I have understand this method.

this statement that I'll make it's for newbie don't overcomplicate ,keep it simple ,the only think you must know is the 1 post.

when I saw all thouse qestion what candel it's about? it's that...? oh the time it's GMT..?...and what about the sl?...or the.......

and after those all qestion come a new guy and repeat thouse qestion again,and again,and again............

don't be a machine,think about what you are reading, try to answer your your all problems by yourself because the answers will come fuster than you think.

now I know why so many people do not have succed in this market.

trust me I'm in this buysnis from the begging of this year( 5 jan 2009 the date that I first hear about forex market).

I have progres faster because from that date I have spent in average 8 hour per day reading, and looking at the charts,and this road it's painfull from many reason,only for the last couple of months I start to trade(only on demo) but still in this days I spend a lot of my time rereading many
material.


may advice to all readers of this thread it's keep it simple KISS

wish you all the best
Quoting SonaV.
hehe is good to know, that Hamlet all the time was thinking about pips :-D
" To TP4 or not TP4, that is the question"
Awesome hahaha
Sometimes the 4hr candle is quite small may be less than 50 pips, so do you all have some minimum candle size ?

Otherwise it may cause lot of whipsaws if it is too small



Abhay
Quoting SonaV.
hehe is good to know, that Hamlet all the time was thinking about pips :-D
" To TP4 or not TP4, that is the question"
It's good to find a fellow trader with a sense of humor.

Good luck on your trades!
Greetings from Guanajuato, Mexico
  • #2,606
  • Quote
  • Edited 8:29pm Aug 26, 2009 8:00pm | Edited 8:29pm
So, I have been tweaking this system around, and of course, backtesting. I find that the TP4 seems valid in trending weeks/months. However, I am doing this to safe guard from ranging markets.

 

  1. First off, the entry is still 20 pips below or above the box.
  2. SL is 50% of box....to me, this is mandatory. This allows a lot more breathing room for losses.
  3. I am currently trading 8 lots(each lot=$1, 2 lots for each TP). You have TP1-4, each the length of the box.
  4. When TP1 is reached, you move SL to breakeven. When TP2 is reached you move SL to TP1...and so on.This is also mandatory to me because if you get only to TP2, you bank 2 lots at TP1, 2 lots at TP2 and then 4 lots at TP1(because of the SL) instead of none at all.
  5. If there are ever huge boxes, like 250 pips, I only use 150 pips for my TPs. Likewise, if there is a small box, like 45 pips, I use 75 pip TPs.
  6. You can still take the breakout to the other side if stoploss is hit.
  7. As your account grows and your risk allows it, and 4 more lots at a $1 each(1 for each TP).

This will work better for me for a lot of reasons. You will get more winning weeks instead of mabye one a month. Less losses to bring down your account. You will protect yourself from ranging markets more effectively.

Let me know what you guys think.

Quoting saltydoo
So, I have been tweaking this system around, and of course, backtesting. I find that the TP4 seems valid in trending weeks/months. However, I am doing this to safe guard from ranging markets.
[list=1][*]First off, the entry is still 20 pips below or above the box.[*]SL is 50% of box....to me, this is mandatory. This allows a lot more breathing room for losses.[*]I am currently trading 8 lots(2 lots for each TP). You have TP1-4, each the length of the box.[*]When TP1 is reached, you move SL to breakeven. When TP2 is reached you move SL...
You're currently trading 8 lots? I hope you don't mean standard lots unless your willing to use that much money.

8 standard lots, stopped out at the 50% mark is more than $5200 (average box size being 130 pips). If its a choppy week and also breakouts are false then you'd lose $10 400 + in one single week. According to the 6-8% rule risk for one week, you account size must be $130 000 to trade 8 lots. You must be pretty damn sure that trading is for you, that or you must be loaded and 130G is just shoe money.

Correct me if im wrong...
Quoting Ace284
You're currently trading 8 lots? I hope you don't mean standard lots unless your willing to use that much money.

8 standard lots, stopped out at the 50% mark is more than $5200 (average box size being 130 pips). If its a choppy week and also breakouts are false then you'd lose $10 400 + in one single week. According to the 6-8% rule risk for one week, you account size must be $130 000 to trade 8 lots. You must be pretty damn sure that trading is for you, that or you must be loaded and 130G is just shoe money.

Correct me if im wrong...


Ace, are you really risking 6-8% risk per week? I think it is a way to much.
There always can be a string of losses. with 6-8% risk , account can be halved in no time and then should make 100% just to bring it back. I think 2% is a maximum risk per trade possible, with 1% is ideal.
I will trade one account with 50% of the box stop loss and above mentioned rules. It would be interesting to see how things will go.
Each lot is $1, sorry forgot to mention and edited the post. On average a 3-4% risk. Not loaded yet
Quoting saltydoo
So, I have been tweaking this system around, and of course, backtesting. I find that the TP4 seems valid in trending weeks/months. However, I am doing this to safe guard from ranging markets.
[list=1][*]First off, the entry is still 20 pips below or above the box.[*]SL is 50% of box....to me, this is mandatory. This allows a lot more breathing room for losses.[*]I am currently trading 8 lots(2 lots for each TP). You have TP1-4, each the length of the box.[*]When TP1 is reached, you move SL to breakeven. When TP2 is reached you move SL to TP1...and...

I 100% agree with you. Protecting ones capital is more important than making higher returns which is usually higher risk.
I trade one account with 50 pips up, move to BE. This way it has been only 4 losing week since January 1, 2009. A lot of BE weeks and also many winning weeks. return was smaller than with original rules but still good.
I will use your rules on one of my 4 accounts I trade this startegy with. each one has slightly different rules.
It was back testing. I only trade second week with this system.
Quoting Jesper
A question though, does your study show anything about the Risk vs Reward ratio?
I mean the stoploss you explained, but which TP's were you aiming for in your investigation?
Hi Jesper,

I was not aiming for any TP in the investigation since its flexible. My main aim was to determine the success rate if entered on Monday and right after the 1st 4Hrly Bar. Anyway for the RRR, if the trade was closed on Monday itself and as soon as the Day's Max is reached (not posible to do this in pracice) then the Reward to Risk is 3.37 high and 0.44 for the low with a mean of 1.584 for all the successful BUYs. As for the SELLs, the high was 7.126, the low 0.523 and the mean 1.91. There were a total of 74 successful Mondays out of 104. The risk is calculated as "54 + open-to-1st-Bar's-Max + 20Pip Buffer" for BUYs and "44 + open-to-1st-Bar's-Min + 20Pip Buffer" for SELLs. The 54 and 44 are stops needed if you do not want to be stopped ot 80% of the time. This means that the stops are NOT trailed. If they are trailed then the success rate is lower.

Hope that answers your questions.


Regards,

Dave
Quoting shiko
I 100% agree with you. Protecting ones capital is more important than making higher returns which is usually higher risk.
I trade one account with 50 pips up, move to BE. This way it has been only 4 losing week since January 1, 2009. A lot of BE weeks and also many winning weeks. return was smaller than with original rules but still good.
I will use your rules on one of my 4 accounts I trade this startegy with. each one has slightly different rules.
Yes, I do risk 8% per week. Thats on both trades. If anyone remembers my post way back in the thread, I used 8% max. I did use AUD/JPY but soon after stopped using it and added to risk onto GBP/JPY and EUR/JPY.

GBP/JPY - 2.5% each trade
EUR/JPY - 1.5% each trade

Now I only trade GBP/JPY. 3-4% on each trade. Would result in 6%-8% loss in a week, worst case scenario. When target hits its +12% - 16% in a week.

But i've been trading it live for 9 months now, as many know, so don't use that much until you're ready. For a few months when i started trading this I played around with 1%-3%. Often stuck with 2%.
I am also just trading GBP/JPY which I think it's the best as many also use this for breakout trading.

The GBP/JPY short trade is still alive for me as I mentioned earlier, my stop loss was missed by just a few pips and that's because my bar closed little higher than some I guess due to my broker (FXCM)

Also price is close to the 3xTP level and we are nearing the end of the week and since price has moved about 450 pips from the beginning of the month where on average you are looking about 500-600 weekly moves. Here we can use our judgement and I will take out my long as I do not want a big reversal for it to just take my long order out and I will just wait and ride my short out until the end of the week and look for another week next week.

As far as some entering multiple lots and taking partial profits.........definetely it is not a bad idea and some like to do it that way as long as your are within Money management rules so you don't wipe out your account incase you have a few losing weeks, then it's a great idea.

Stop loss at 50% of the original box seems very feasible especially when the box is more than 100 or 150 pics.......doing some visual back testing i have noticed that when the initial box range is big and we get a correct breakout, very seldom does it come back down and go to the other side of the box without first hitting 1xTP and by then you have already moved your stop loss to BE and for those who take partial, you are in the green and the rest is stopped out at BE.......

But in examples where it is a false breakout, majority of time, price goes all the way to the other side of the box to breakout the other way and you can minimize that loss by having your inital stop loss at 50% of the box range.

For box ranges that are small, lets say less than 100, then it is more feasible to have a whole box range as a stop loss.........

Any suggestions?
Keeping Life Simple
  • #2,615
  • Quote
  • Aug 26, 2009 11:53pm Aug 26, 2009 11:53pm
GBP/JPY has hit our 3xTP level and so as per my money management rules..........I will move my stop loss to 1xTP and will let it run until the end of the week...........we might have some momentum to get to 4xTP....we'll see
Keeping Life Simple
1st of all, I would like to say thanks to Ace for the system. Base on maths, if a system can consistantly making certain winning trade with certain X value (X box size), it is a good system. Because with the value we can plan to make money from there... As you can see in the table attached, if we can win 26 trades out of 100 trades with 2X value, actually we are making money. It means we no need a 100% winning system, so call holy grail system where it would never exist.

From this system, I could see that actually it is what I am searching so far, simple, easy and stress free... Btw, I am not trade with many lots because I don't have enough money in the account to last for 100 trades if trade is lossing in a row...

I would prefer to target for 2X each week on GJ. When account size grow, then only increase my trade lots.... It could grow slow but steady...

So, my opinion is; don't over trade your value account because chances always out there unless there is only single currently left in this world...
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  • #2,617
  • Quote
  • Edited 2:00am Aug 27, 2009 1:30am | Edited 2:00am
Quoting Freako
im trying to daily trade using this system on another new fxcm micro account of 30usd.... place order on G/J at 152.8,sl at 153.59,tp at 151.80.... price broke the support level n waiting to break the pysch level..
just an update on my daily trade using the first 4hr candle of the day.. trade was trigger yesterday my time.. i make a profit of 80 pips today instead of 100 pips which i mention yesterday.. my stop loss is 80pips.. so r:r is 1:1.. but i guess no more of this.. i actually just browse thru a backtest by looking at the chart,i cant make it far if to trad daily.. weekly is better.. ACE system is RECOMMENDED..
Quoting time1300
I am also just trading GBP/JPY which I think it's the best as many also use this for breakout trading.

The GBP/JPY short trade is still alive for me as I mentioned earlier, my stop loss was missed by just a few pips and that's because my bar closed little higher than some I guess due to my broker (FXCM)

Also price is close to the 3xTP level and we are nearing the end of the week and since price has moved about 450 pips from the beginning of the month where on average you are looking about 500-600 weekly moves....
im wondering how ur trade is still alive while mine is dead after hitting BE..
Quoting shiko
I 100% agree with you. Protecting ones capital is more important than making higher returns which is usually higher risk.
I trade one account with 50 pips up, move to BE. This way it has been only 4 losing week since January 1, 2009. A lot of BE weeks and also many winning weeks. return was smaller than with original rules but still good.
I will use your rules on one of my 4 accounts I trade this startegy with. each one has slightly different rules.
brother shiko,u always said that u wait for 50 pips den u move ur sl to BE rite? have u try using 100pips instead of 50? or maybe u trade 2lot den u might want to close half at 50 pips then move SL to BE..
Quoting Freako
im wondering how ur trade is still alive while mine is dead after hitting BE..
Time is using IBFX and their first 4 hour bar actually starts 1 hour before the official open, it also closes 1 hour earlier. That's why the figures are different.

Time, I have not tested the bar your using or used it for that matter. I think it does make a difference because various orders will be taken earlier, or later, and your numbers won't match with what we've been using here consistently.

So I don't know if TP4 in general is the best target for your scenario or any TP for that matter. As with anyone else, I'd recommend using the FXDD demo as reference.

On my account the BE stop was hit earlier, and the long is cancelled, because there is little to no chance of TP4 on the long or even TP3 being hit if it reverses. (According to ATR). Chart Below
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