00:00 GMT Breakout EURJPY

Hi all,

I would like to get your input on a breakout strategy I've been looking at. In fact, backtesting this strategy shows it can make 400 - 600 pips per month!

This is the setup:

Open EURJPY H1 chart. Make sure your "period separator" lines are showing. Now, the breakout is below and above the 00:00 candle. This means you can place buy and sell stop orders at 01:00 GMT. Your orders should be at the high and low of the 00:00 GMT candle.

TP = 70
SL = Other side of box

I've backtested since October 2009 and it looks very profitable!

Would like your feedback.

Thanks,

More like a random play rather then going with trend. Can you please backtest for a year and let the public know the results.

If this is a mechanical algorithm then I would strongly suggest you test in more markets, timeframes, and periods of time. If this is traded by hand then I think you should try it in real time and "own" your system before going live.

Hi sitestuff,
a friend of mine did have this kinda system back in 2008 and early 2009..but he only do it with GJ..just like ur result it petty nice at 1st but in the end he had to stop it...he use TP50 sometime price go like 30-40 then straight down/up and hit sl, sometime on 2nd candlestick already hit sl after 00 candlestick..

But i dunno about EJ it might works with EJ so all the best and good luck

ps: do u pending both side? he used to do that and that will cost more...

As someone mentioned, 3 months is not enough backtesting but it is a good start. If the strategy was failing I would say abandon it and try something else. But a 3 month winning backtest doesn't mean much. Any winning backtest will have inflated wins because the normal trading friction such as requotes, wider spreads and lost connections don't apply in Strategy Tester like they do in the real world. I don't know what guideline (10%??) applys for these losses but it must be considered.

One weakness of the box breakout is how poorly they perform in ranging market conditions. In trending conditions, they should be quite profitable. But when the market goes sideways, the SL will be hit more often than the TP. You need to examine the losers very carefully with respect to what was happening trendwise. This will give you a more realistic feel for how it will perform in the long run.

Thanks guys for the feedback!

I did some more backtesting, and September 2009 was a bad month. I had a quick glance at the previous months and it looks like some months would be good, but some would be bad.

I also read some comments on other breakout strategies and the general comment is this it works fine in trending markets, but can easily kill the profit during other market conditions.

For now I will keep playing in demo.

Cheers,