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7am-9am Big Dog USD Breakout Strategy

  • #1,761
  • Oct 30, 2009 11:31pm Oct 30, 2009 11:31pm
Quoting DubaiTrader
But once a trend forms, it tends to last. I have a friend who wants to test it so I'll report back any findings.
Hi DubaiTrader,

I think GBP/JPY might be more interesting as compared to USD/JPY. Looks like I have to take a closer look and do some test.
  • #1,762
  • Oct 31, 2009 2:51am Oct 31, 2009 2:51am
Quoting Fumiryu
Hi DubaiTrader,

I think GBP/JPY might be more interesting as compared to USD/JPY. Looks like I have to take a closer look and do some test.
There is no real reason for GBPJPY to breakout during NY open though. GBPJPY is an asian/london traded pair, pretty sure GBPJPY volume is low during NY session.

Always interested to see other pairs though.
  • #1,763
  • Oct 31, 2009 11:07am Oct 31, 2009 11:07am
Dubai Trader,

Why do you not trade the London Open Breakout?
Do you notice that the GU/EU break out on the same days (if slope is trending on one it usually is on the other)?

Im going to backtest the method using the 1hr slopes on various other paris this weekend. Done the EU/GU so far and it seems that TP50 is a good secure level, however some breakouts do run for over 100 pips.

Do you use a trailing stop or breakeven at all?

Thanks for your postings!
  • #1,764
  • Oct 31, 2009 12:03pm Oct 31, 2009 12:03pm
Quoting gangsta1
Dubai Trader,

Why do you not trade the London Open Breakout?
Do you notice that the GU/EU break out on the same days (if slope is trending on one it usually is on the other)?

Im going to backtest the method using the 1hr slopes on various other paris this weekend. Done the EU/GU so far and it seems that TP50 is a good secure level, however some breakouts do run for over 100 pips.

Do you use a trailing stop or breakeven at all?

Thanks for your postings!
Hi, I have other strategies for the morning breakout.

Generally speaking GU and EU do break on the same days but occasionally one will break whilst the other doesn't. GU/EU are correlated to some extent.

I haven't tested a trailing stop and I'd move my stop to BE around 35-40 pips to save a complete retrace to a loss. It doesn't happen very often but better safe than sorry.
  • #1,765
  • Oct 31, 2009 2:29pm Oct 31, 2009 2:29pm
Okay,

How about the length of the trend for both the slopes. Do they have to have trended for a day or so for you to enter? Or do you enter even if they both just started trending in the few hours before the breakout would happen?
  • #1,766
  • Nov 1, 2009 1:33am Nov 1, 2009 1:33am
Quoting gangsta1
Okay,

How about the length of the trend for both the slopes. Do they have to have trended for a day or so for you to enter? Or do you enter even if they both just started trending in the few hours before the breakout would happen?
This is exactly what I'm interested in as well. When to look at the slopes? Before, after or exactly in the moment of breakout? I presume that you're looking at the slopes on 1H chart. Do you still use 10 pip buffer? I mean, do you open the position exactly at the breakout point or 10 pips below/above (false breakout protection).

And what about the morning strategy? Do you still use the "early bird catches the worms" one?
  • #1,767
  • Nov 1, 2009 1:37am Nov 1, 2009 1:37am
Quoting koco
This is exactly what I'm interested in as well. When to look at the slopes? Before, after or exactly in the moment of breakout? I presume that you're looking at the slopes on 1H chart. Do you still use 10 pip buffer? I mean, do you open the position exactly at the breakout point or 10 pips below/above (false breakout protection).

And what about the morning strategy? Do you still use the "early bird catches the worms" one?
As long as the slopes agree, I count that as confirmation. If they are just turning, that is usually a solid sign. If the PA breaks the box and the slopes do not agree, I do not simply forget that pair because the slopes can align eventually and the price can retrace for an entry. The most important thing to remember; Check slope for direction, take the trade in the slope direction. The box is defined by the preceding 5 candles on the M30 chart AND a 10 pip buffer. Why 10? No real reason other than a round number, I've seen the morning breakout using 7 pips...I'm more of a round number person.

The Early Bird was simply a test, I'm still monitoring it. I actually only trade with real money on 3 strategies. Click here to read more.
  • #1,768
  • Nov 1, 2009 1:02pm Nov 1, 2009 1:02pm
Hi guys, hi dubaitrader

I just have one question.Couldn't find the ansmer in previous messages.
The box consists of the price movement between 14:00 and 16:00.
But the indicator uses 5 bars (30M) which means an additional 30m.
Shouldn't the last bar be 15:30 bar.

Sorry if you have already answered that question but I really couldn't find it.
And sharing a system that actually works is truely generous of you.

Good day
  • #1,769
  • Nov 1, 2009 1:16pm Nov 1, 2009 1:16pm
Also you said 3 pairs are good to go with this system. I guess two of them are EU and GU. What is the 3rd one? and have you backtested all these pairs' 2008? and were the test parameters (SL,TP) identical?

Thanks a bunch
  • #1,770
  • Nov 1, 2009 8:40pm Nov 1, 2009 8:40pm
Whats the gmt times for this strategy and the pairs where you use it?


Thanks in advance
“Well, you know, I was a human being before I became a businessman.”
  • #1,771
  • Nov 1, 2009 10:31pm Nov 1, 2009 10:31pm
Quoting PrincoPrinco
Also you said 3 pairs are good to go with this system. I guess two of them are EU and GU. What is the 3rd one? and have you backtested all these pairs' 2008? and were the test parameters (SL,TP) identical?

Thanks a bunch
Hi Princo, the third pair is EJ. The times are 7-9AM EST. This means the last candle forms at 0900 and ends at 0930. I used the same SL and TP for all pairs, however I think I've found an improvement for EU.

aph-GMT times are 1200-1400.
  • #1,772
  • Nov 2, 2009 12:25am Nov 2, 2009 12:25am
Quoting DubaiTrader
Hi Princo, the third pair is EJ. The times are 7-9AM EST. This means the last candle forms at 0900 and ends at 0930. I used the same SL and TP for all pairs, however I think I've found an improvement for EU.

aph-GMT times are 1200-1400.

This strategy works with most pairs if you extend the box to 7-10 EST. Also if you notice, the most profitable entry point is not right after it breaks, rather when after it retraces back inside the box to about 3 fib levels 38%, 50%, 61%. (althought this does not happen all time).
It moves in waves and it would be helpful with a little understanding of wave movements.
  • #1,773
  • Nov 2, 2009 12:41am Nov 2, 2009 12:41am
Quoting Pricefex
This strategy works with most pairs if you extend the box to 7-10 EST. Also if you notice, the most profitable entry point is not right after it breaks, rather when after it retraces back inside the box to about 3 fib levels 38%, 50%, 61%. (althought this does not happen all time).
It moves in waves and it would be helpful with a little understanding of wave movements.
Pricefex: yes, you should be right with the fib levels, I also noticed (just visually) that this can be true, but here's a problem that you already mentioned that this does not happen all time. The biggest problem is the false breakout. If the box is broken and retraces back and then goes the opposing direction we are in loss. I admit that in smaller loss as if we enter the trade at the box border. However, in case we're waiting for the fib retracement(s) after box breakout, we can also never achieve these levels, because of some straightforward breakouts that continue the direction right after they crack the box.
However, this were just my fast thoughts, therefore if you have some good results for a longer time and have a working strategy, please share with us. This sounds interesting. Thank you.
  • #1,774
  • Edited 2:36am Nov 2, 2009 1:50am | Edited 2:36am
Quoting koco
Pricefex: yes, you should be right with the fib levels, I also noticed (just visually) that this can be true, but here's a problem that you already mentioned that this does not happen all time. The biggest problem is the false breakout. If the box is broken and retraces back and then goes the opposing direction we are in loss. I admit that in smaller loss as if we enter the trade at the box border. However, in case we're waiting for the fib retracement(s) after box breakout, we can also never achieve these levels, because of some straightforward...
I would say it s about 50/50 that either it keeps moving after the breakout or retraces back inside to the box and starts moving again. Chances of false breakout are less if you extend the box to 7-10am EST instead of 7-am - 9am. All techniques and strategies have their flaws and there will be losers, thus money management is needed. Now it comes to the point that you either choose to wait for it to retrace back inside the box to at least the 23.6% or 38% or just hoping that it continues to move forward right after breakout. Your choice. If it does take off and never return then you just miss the trade. However , if you are conservative then it would not hurt to miss a trade then losing or trailing it. Obviously if the box is small within 20-40 pips then I am willing to enter the trade right after the breakout because the loss isn't much. However if the box is quite big then waiting for it to retrace is a reasonable option for me.

This very simple breakout principle does apply to the Tokyo and London sessions as well. And so to avoid the confusion about where to draw the box, just know that each session opens at 8am of its local time. For the tokyo session, I draw the box at 6am -9am Tokyo time. For the Frankfrut/London session, I draw the box at 5am-8:30am London time.
  • #1,775
  • Nov 2, 2009 8:41am Nov 2, 2009 8:41am
GU; Looking for the breakout short.

EU; Looking for a breakout long.

EJ; Looking for a breakout long.

However, EU and EJ slopes could easily switch to contradict a long breakout.

GU looks the solid option here.
  • #1,776
  • Nov 2, 2009 9:25am Nov 2, 2009 9:25am
Quoting DubaiTrader
GU; Looking for the breakout short.

EU; Looking for a breakout long.

EJ; Looking for a breakout long.

However, EU and EJ slopes could easily switch to contradict a long breakout.

GU looks the solid option here.

I agree with your analysis. However, the ISM report along with other fundamental news have caused the usual over-reaction in the markets. EJ and EU worked out beautifully. GBPUSD did not. Good trading!

fxpilot
  • #1,777
  • Nov 2, 2009 9:40am Nov 2, 2009 9:40am
I placed the trades of all four pairs after the blue block was finished.
In CHFUSD and EURJPY I was in before the reports came out.
The EURUSD entry was pushed 10 pips up before I was filled and the USDJPY entry was pushed up 20 pips.....puu...
....I forgot the check out forexfactory.com for reports before....
My tp were filled so fast, that I had no time to change it...


But my trades went fine, great for my first day with this strategy...:-)

Thanks for all the info within that thread.
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  • #1,778
  • Nov 2, 2009 1:27pm Nov 2, 2009 1:27pm
Try and place buy orders at 20 TP only based on the last candle at 16:00. I have been getting good results doing this.
Direction is more important than speed. Alot of people go nowhere real fast
  • #1,779
  • Nov 2, 2009 2:31pm Nov 2, 2009 2:31pm
Here is my take on MM for this "Breakout" strategy. We are trading these times because we want price to break out with a vengance. Therefore I do not believe a 50 pip stop loss is a great option. If we use MM that allows for the price to retrace that much, then in my opinion we are no longer trading the "Breakout". When the "Breakout" does happen (properly) it runs for a good amount of pips without us having to suffer drawdown. As most of you know, what I am trying to say is keep the losses small and let the profits ride.

E.g. Test this strategy with a SL:10 and TP:50. If you traded 5 US pairs during the breakout you could afford to lose 4/5 and still be up 10 pips!

Whereas if you use a TP:50 and SL:50, well you get the point. (However Dubai Trader props to you for being successful with this MM, although I wouldnt trade 1:1 risk:reward ratio).

If you need clarification, draw a line anywhere on the chart and use MM 1:1. There is a good chance if you allow drawdown the price will come back to the line (Martingale type strategy). This is a breakout strategy to take advantage of the big moves during a certain peroid of time and the slopes recommended by Dubai Trader help to get us on the right side of this move.
  • #1,780
  • Nov 2, 2009 2:38pm Nov 2, 2009 2:38pm
Quoting gangsta1
Here is my take on MM for this "Breakout" strategy. We are trading these times because we want price to break out with a vengance. Therefore I do not believe a 50 pip stop loss is a great option. If we use MM that allows for the price to retrace that much, then in my opinion we are no longer trading the breakout. When the breakout does happen properly it runs for a good amount of pips without us having to suffer drawdown. As most of you know, what I am trying to say is keep the losses small and let the profits ride.

E.g. Test this strategy...
I guess it all comes down to personal risk exposure and tolerance for losses. I think 950 pips across 3 pairs with over 75% success rate is extremely good. I'd happily risk 5% on a breakout. That means a 95% growth before compounding in one month!! Or drop that down to 3% and you get 57% return before compounding. For one strategy, I've yet to see a strategy on this forum with returns close to that.

That's not to say there isn't, I'm sure there are plenty! I personally think EU can be refined to a smaller SL to around 30-40 pips.
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