4HR Mechanical Breakout - Looks Like an Edge

Pair

GBP/JPY

Time Frame

4HR

Bar

Bar opening at 1:00am GMT and closing at 5:00am GMT. That is the bar closing at midnight, or 12:00am, In Eastern Standard Time.

Time to Implement

15 minutes per pair per day.

Method

This is a breakout method.

 

1. Calculate the range of the bar by subtracting the high from the low.
2. Calculate entry size, shown below.
3. Place an order to buy five pips above the high of the bar.
4. Place your stop loss five pips below the low of the bar.
5. Place your take profit order three times the distance between your stop loss and entry.
6. Place an order to sell short five pips below the low of the bar.
7. Place your stop loss five pips above the high of the bar.
8. Place your take profit order three times the distance between your stop loss and entry.
9. Wait for your stop loss to be hit, or take profit to be hit.
10. Cancel any orders that were not triggered at the same time 12:00 EST on the next day.

Logic

Breakouts are obviously beneficial in regards to price action. We all know that. My favorite part of this strategy, beyond the great risk-to-reward ratios, is the size of the stop. The stop is calculated based on the range, and that range is made equivalent to ones desired risk per trade. This is beneficial because it is constantly shifting according to the volatility of the market.

Entry Size

Do not risk more than 2% per trade per pair traded. If one were to risk 2%, hypothetically, for both the long and short orders, and the range of the 4HR bar is 75 pips on the GBP/JPY, given the current exchange rate of 131.801 for the GBP/JPY, and an exchange rate of 1.64211 for the GBP/USD, and a base currency of U.S. Dollars, the calculation would go as follows for a $100,000.00 account.

 

1. .02 x $100,000.00 = $2,000.00
2. I'd suggest using http://www.forexcalc.com for the rest.
3. Position size for each trade = 214,035
4. Compound daily.

Potential Changes

 

1. Trailing stop equal to the distance between entry order and stop order, calculated by subtracting the high from the low and adding ten pips.
2. Potential move to break even once a 1:1 RR is reached.
3. Potential move to break even once a 2:1 RR is reached.
4. Use a 2:1 R:R instead of 3:1.
5. Use a 1:1 R:R instead of 3:1.
6. Additional pairs, particularly GBP crosses.

Notes

 

1. Never reenter in the same direction.
2. Place a maximum of two trades per day per pair, one long and one short. Preferably just one though.
3. Cancel orders 24 hours later.

History

 

1. I've only visually tested this system historically, but it seems to be incredibly profitable across the pair mentioned here, as well as many others.
2. It looks like it wins 50%-60% of all trades and averages about 30 trades per month per pair.
3. Visually it is easy to calculate percentage gain per month, as pips, apart from the range, are rather irrelevant. You either lose one unit of profit or make three units of profit each trade, obviously non-compounded.

Questions & Help

 

1. I need someone to develop an EA that can test this strategy and fine tune it given the potential changes above, proving it's long-term profitability and shaping it as much as possible. I am a manual trader and don't even use MT4, so any help would be greatly appreciated.
2. Also, what would one suggest I do regarding hedging? Managing sub-accounts is a pain. Some potential answers are:
   1. Only trade in the direction of previously open trades.
      1. This might actually help us filter out some false breakouts, just look at this past month.

   2. Sub-accounts, even if they are a pain they are worth an average of 30% a month.
   3. Some odd sort of closing and reopening so that we can work with FIFO? I'd rather not even think through the depths of this notion, but again it would be worth 30% a month if that's what it takes.

Finally

It seems that this sort of method is profitable for traders across the board, in a ton of time frames, pairs, markets even, as well as sessions. Many similar methods are mentioned on this forum. I think it is safe to say it, and systems like it, provide an edge. As a result, it would be great if we had an EA that allowed us to do the following.

 

1. Choose any time frame.
2. Choose any bar.
3. Choose pip buffer.
4. Choose breakout or reversal.
5. Choose to only enter on a retrace, for example a certain number of pips or a certain percentage of the current bars range.
6. Choose between a trailing stop, a hard stop, a move of our stop at after a certain pip value, or percentage value, think risk-to-reward or a certain percentage of the current bars range.

It looks good, I will give it a look this weekend. Thanks for sharing!

I like the idea of using the 4 hour bar. I am testing your strategy with some of my own personal optimizations.
SL= 30 pips or otherside of the range. Which ever is smaller of the two.
TP- 100 pips.
+50= Move stop to breakeven.
+75= Move stop to +10.

I have to go, but i'll post a chart and explain later.

theres a generic breakout EA v7, pl do a search, it can solve your problem

I think I remember seeing several EAs that do breakouts like this. I think most of work on the previous day's bar or a specific 1H bar, but they might allow for your choice of a 4H bar. I don't remember anyone claiming to be profitable, so don't spend much time testing. Just like any other breakout, it will work when the market makes nice moves but you lose more when they are choppy.

Of course you realize it will be difficult to reproduce results from one broker to another. One person might be successful and another lose money on the same bar.

Hi CodeMeister,
how can i run a way from the below message:

Sorry, as a Junior Member you cannot perform this action.

i need to add my post.

i have small quetion

how can i add this condition

if ( last OrderOpenPrice()> preview OrderOpenPrice() )

many thanks

Your times are wrong. The difference between GMT and EST is 4 hours right now, not 5.

Thanks for sharing this. I like systems that trade off a longer tf; they tend to be a bit less erratic.

If you want an EA for this strategy, then Steve Hopwood might be the guy to approach. He's a prolific EA coder, as can be seen from many a thread here on FF.

This is my trade for Friday. As you can see, it was a solid winner. Thanks for starting this thread. It has helped me fine tune and re-think my trading trading method. I don't think the Manage Take Profit EA that I installed is working properly. If anyone has an updated version, would you be so kind as to post it.

Thanks

GMT right now is 9:18 PM and EST right now is 5:18 PM.

http://wwp.greenwichmeantime.com/.

I'm guessing it has to do with DST.

Thank God!

The current time on the East Coast of the United States is 5:49 PM. The current GMT time is 9:49.

That is 4 hours. Right now.

You are a very judgmental person. I am merely pointing out the difference between Eastern time right now and GMT is 4 hours.

OK I said it wrong then. Not sure that requires judgmental calls such as you are prone to make. But if it makes you feel better go ahead and shoot me.

Thank you for not adding how technologically challenged I am. I appreciate that small kindness.

Personally, in life I would rather be technologically challenged than a man without a heart. But that's just me. I have nothing further to say to someone like you. Go ahead and have the last word and feel good about yourself.

I'm referring to, as stated, 8:00pm to 12:00am, or midnight, Eastern Standard Time. That's all.

Dreamliner and zznbrm have been blocked from the thread.

That was easy. Act like a child, you'll get treated like one.

Now, back to trading.

I like your style.

Monday results -30.
What do you guys think of my trade parameters?
Is there an EA that could help with the TP'S,SL'S and plain old trade management?