Magic-Breakout (optimised) with PPA - a new beginning

Hi everyone

Firstly I'm not going to touch on MM because we all know the rules on that and they apply here as much as they do with any strategy. You will see how true that is looking at my TE - low leverage losses hardly affects my account balance - but when I'm winning I might over leverage a bit to maximise my gains!!


But to have definite RULES and rigidly sticking to them is absolutely vital for successful trading - also when it comes to my new strategy! I'll show you actual examples of what I mean


The basic idea is to ONLY trade fast moving trends. That means we have maximum chance of success and minimum chance of failure

So taking our Daily/15 min charts I look for these important parameters (trade only EUROPEAN and US SESSIONS):

1/ Daily chart to show good candle reversal/continuation
2/ Look for price action to clearly breakout of Asian session high/lows (closed candle) on 15 min chart
3/ Price action WELL ABOVE/BELOW daily pivot point level
4/ 15 min chart price action inside the 28 EMA and preferably riding the 12 ema.
5/ When price action breaks through the 28 ema but remains within the 55 ema NO TRADE but remain on the watch for price to regain the trend inside the 28 ema again
6/ Only go down to 5 min chart to look for a good entry point (if necessary)
7/ Do NOT trade the session before an important news release and at least half an hour afterwards (as a rule)
8/ ALL the EMA's need to be nicely in line above the vegas tunnel (buy trade) or below the vegas tunnel (sell trade)


Example charts to follow:

Would it be possible for you to list your EMA's, or. perhaps repost your templates as what the posted templates show and your current charts are quite different.

Specifically the 'Vegas Currency' Settings you appear to have modified.

Thanks

daveM

Hi Blaiserboy

No I haven't changed anything. I'm posting an AUDUSD chart from 20th December below. I'm also posting my 15 min chart template and daily chart template as well as all the indi's. (I've revised the 15min template to slightly open the 28 ema tunnel and a more prominent 12 ema.)

Looking at the chart below we see that price action nicely broken out of the Asian high and tracked the 12 ema until late in the european evening. Next morning the trend broke down (broke through the 28 ema) so we would stay out!

IMPORTANT - I've added two more rules above. One obvious really about not trading when a major news release is expected and at least half an hour afterwards (as a rule) and the other about only trading when all our MA's are nicely lined up (see chart below)

IMPORTANT NOTES:

1/ You will need to reset the p1m1t indi depending on your MT4 platform time. My broker is IC markets which is GMT + 2 hours. I set the p1m1t indi to show the Asian session from 0.00am to 7.00am (GMT) so on my brokers MT4 platform I set the "range start time" to 2.00am and "range end time" to 9.00am (see attachment)

2/ I've set my MA bounce candle indi envelope to 30 (see attachment) but you can set it to whatever you want. It's useful because the wider the dotted lines are the slower the trend - very narrow = fast trend!

EXAMPLE (GBPAUD)

A nice thing to do of course is when trading co-related pairs and one sees that a certain currency is very strong - one can trade a cross that moves a lot more to good effect. For instance on the 20th last Friday, (AUD had a strong period and GBP was fairly weak) - so we:

firstly we look at the daily chart (see attachment) chart looks good after reversal candle on the 19th

then look at the 15 min - nice breakout from Asian trading range in the early afternoon (AND ALL THE RULES ABOVE WERE MET) - ended with a 100 pip drop!


Of course we can also use the "forex power" indi on our daily chart to check on relative currency strength/weakness


But how/where/when do we enter the trade? Next post!

Great posts..

Congrats on hit ratio and account increase.....

I really appreciate your instructions.

Thank you

daveM

Really a pleasure - actually helps me to impress into my own brain those important rules to stick to in order to succeed with this system.

Yes there is no "holy grail" or "hidden secret" to successful forex trading because to an extent every trade is a gamble as the fundamentals/sentiment which are driving any particular move can change in an instant and that's something we minnows have no control over. But I do believe that there are ways to significantly narrow the odds not only to win but win big - also to lose less if things go wrong - and that's what I'm trying to achieve here.

Rgrds

Jerry

IMPORTANT RULE CLARIFICATION AND THE SET-UP


Rule 5: Sorry I must make it clear that the 28 ema (purple line) on the 15 min chart is sacrosanct - i.e. Once it's breached I suggest no more trading on that pair until the NEXT DAY when very often the trend will have changed and we're probably going to be opening a trade in the opposite direction.


THE SET UP

OK this is the important part because as we all know, it's great to see a nice move in hindsight but rarely have we been able to benefit from it because we were never part of it!

The great thing about this strategy is that we have 1/ a definite time to trade (European and beginning of US sessions starting at 7.00am (GMT) and ending normally around 8/9.00pm (GMT). Your daily chart candles have also been open for 7 hours so you should have a fairly good idea of the trend for the day and 2/ Definite levels (Asian session high/lows) to trade from. In other words, the WHEN and WHERE are now taken care of.

Of course that means that for 13/14 hours every day our eyes are going to have to be glued to our Monitor/PC screen which is obviously a no-no for most people! But there is a way around the problem. Yep, you need a VPS or your platform needs to connected constantly. Along with that you need to know how to set up email alerts from your MT4 trading platform directly to your smart phone so that wherever you are you can whip out your laptop and do the necessary! If you don't know how to set up email alerts, just let me know and I'll email you the instructions.

So on your VPS you will have all your 15 min charts open of the pairs you are trading (you could for instance have XAUUSD, AUDCHF, GBPAUD, EURJPY, GBPJPY, GBPNZD - all nice movers). On our desktop we will have the daily charts of the same pairs which we are checking to analyze the trend. Now on the VPS we can then set our alerts at say 5 or 10 pips above/below the Asian session lines. So looking at the GBPAUD example above, we could have set an alert just below 18400 say at 18395. As soon as price action touched 18395 our smart phone email alert would have gone off alerting us to start looking for a good place place to sell GBPAUD! But how to find a good place to open our sell trade? Let's look at that in the next post (with examples):

ENTRY

OK lets continue with the same example. You've been alerted by your platform that price action has broken through resistance down to 18395. The 15 min chart probably looks like the first chart below. What do we do? Well what we don't do is open a trade now - NEVER chase a move! ALWAYS look to trade a retracement. Price action is far away even from our 12 ema on the 15 min chart so we go down to the 5 min chart in order to look for a good bounce opportunity off the 12 or 28 ema. Often price action will retest the Asian range level so that's also a good place to open a trade.

Looking at the 5 min chart below there were actually 3 opportunities (light blue arrows) to enter at a good level without needing a large SL (20 pips is usually OK)

We'll look at more examples but next I'll discuss our EXIT strategy

EXITING

Well here's a good chance to discuss RR (risk/reward). One really needs a definite rule here otherwise the urge to close out a trade too early can be overwhelming. I think 3 : 1 is quite achievable with most trades using this system. So if we're setting a 20 pip SL we go for minimum 60 pips TP.

Here's some other ways to monitor a trade:

1/ BRN target. Often the "big guys" are targeting a definite level - usually a BRN - in the case of our GBPAUD example above, 18300 was the obvious target!
2/ Use the 12 ema on the 15 min chart or the 28 ema on the 5 min chart to control the trade. If price action breaks through the ema's then close out the trade.
3/ The time. Once it gets to late in the US session, we're unlikely to see the move continue - best to close out the trade as one never knows what's going to happen overnight.

ASIAN SESSION LEVELS

Hi everyone

I think that it's important to spend a little time on our Asian session levels. There are a few ways to analyze the "box" that is created by our Asian high/lows (using the p1m1t indi) to increase the chance of a successful trade when/if the levels are breached during our daily trading session.

Firstly, on our 15 min chart at 7.00am every morning we should be able to see the last 2 days boxes. Where are they in relation to todays box? Below or above? Often gives a very good idea of where the trend should be heading today.

Secondly, looking at our GBPAUD example above, was price action attempting to breach a support/resistance level during the night? Yes it tried three times to breach 18400 without success. Of course with the extra volume during the day sessions, we could expect to see that level breached at some point - and once it is was the pip haul was huge!

Thirdly, it's important to have a good idea of the daily range of the trading pair that we wish to trade. Why? Well because if there has been a big move during the night on a particular pair that we might want to trade, it's unlikely that our target will be met even if price action breaches the box. I have found a very nice indi which I personally am going to use which gives the range over the last 20/10/5/1 days - very useful (I've attached it). I've also attached my GBPAUD chart for today which does really illustrate the point - big move during the night - some pips available today (30 or 40) but would not have made our target!

LETS ENCAPSULATE OUR DAILY / 15 MIN BREAKOUT STRATEGY RULES

NB: Print the Rules out and keep them next to you at all times!!!

NB: trade only EUROPEAN and US sessions until 8.00pm/9.00pm (GMT)

SYSTEM REQUIREMENTS
Ideally you need to have a good VPS with at least 1 gb of RAM. I use SWVPS (costs around $20 p/mth). You need to set up "email alerts" on your MT4 platform and on your smartphone (remember that the MT4 platform does not support SMTP from free email providers like gmail - there is a way around the problem - just let me know if you need help)

TRADING PAIRS
Ideally for this strategy we are looking for trading pairs with a BIG daily trading range and with price action that generally moves far and fast. I like: XAUUSD,GBPAUD,GBPNZD,EURJPY,GBPJPY,AUDCHF but you can concentrate on any particular one if you want!

STRATEGY RULES
1/ First thing every morning check your daily charts looking for good candle reversal/continuation on one or more of your trading pairs.
2/ Look for price action to clearly breakout of Asian session high/lows (closed candle) on 15 min chart/s which you would have constantly open on your VPS. You can simply set up EMAIL ALERTS above/below the Asian box.
3/ Price action should be well above or below DAILY PIVOT POINT level in the direction of your trade
4/ The 15 min chart price action breakout must be well inside the 12 EMA and 28 EMA
6/ Go down to 5 min chart to look for a good ENTRY POINT OFF A PRICE RETRACEMENT (if necessary)
5/ If price action eventually breaks through the 28 ema DO NOT TRADE anymore until the next day
7/ Do NOT trade the session before an important news release and at least half an hour afterwards (as a rule)
8/ ALL the EMA's need to be nicely in line above the vegas tunnel (buy trade) or below the vegas tunnel (sell trade)
9/ Analyze the ASIAN SESSION BOX (created by our p1m1t indi) on your trading pairs as soon as possible after 7.00am. The smaller the box (little activity during Asian session) the better!
10/ Use a good DAILY RANGE INDI which gives the average daily range of any trading pair so we know how many pips we can expect to gain on our trade.

Hi everyone

I'm not trading live yet until after the new year.

But looking at the various trading pairs, we have a strong Pound which means nice trading on our GBP related pairs.

Breakout on Gold too but as it's "silly season" I think caution is warranted.


We'll take a look at the trading day later and see how our system stood up to the test!

EXAMPLE

OK a nice example today was EURAUD. At 7.00am (or as soon as possible thereafter):


1/ We first would have checked the DAILY CHART and it would have looked like the one below. VERY BULLISH!!

2/ On our 15 min chart, we would have had an alert at around 10.00 am when price action reached 15476. Nice retracement at around 11.00am for 60 pips!

3/ We checked the AVERAGE DAILY RANGE and realised that there was still a nice long way for the upmove to go!

4/ All the other rules of our system - complied


Guys, I've been told that we can use "PUSH NOTIFICATIONS" direct to our iphone or Android (having downloaded the MT4 app) instead of email alerts!

ANOTHER EXAMPLE

Another nice example (from yesterday) - AUDCHF

Notice how price action BOUNCED nicely off the Asian session box . Easy 3 : 1 RR

SPIKES

REALLY important! Possibly to add an No. 11 to our rules - Don't trade spikes (sudden violent price move!)

Pretty easy to spot spikes of course . Yesterday and the day before on XAUUSD (Gold) we had spikes. Yesterday for instance, we had one 15 min chart 80 pip candle. The day before we had a similar sharp move. Probably due to this low volume - high volatility time of the year of course.

I've posted a XAUUSD 5 min chart from Thursday. Nicely illustrates of course why we NEVER chase a move - always look to trade a nice "bounce" off our major ema's on the 15 or 5 min chart. As you can see - it was a "spike" because there was no nice bounce mainly due to low volume conditions of course!

Hi everyone

Just wanted to post my slightly revised templates which include the new indis ("Batfink" daily range indi and "forex power" currency strength indi) which have already been posted above. Also I've highlighted the 12 ema a bit more (on the 15 min chart template) because of it's obvious importance for "bounce" trades entries.

For those new to my thread, this a completely revised strategy. You need to only concentrate on Post No. 320 onward to understand it as the previous "magic breakout" CCI system has been ditched. Why? well because frankly it was too difficult, complicated and time consuming for most people to understand.


Please feel free to ask any questions - anything you don't understand - will try my best to answer!

PRE-TRADE PREPARATION AND SET-UP

OK lets spend some more time at what I would call "the pre-trade routine" using another example from Friday - GBPJPY

When we firstly look at our daily chart just after the close of the Asian session (see example below) what do we want to see? Yep, a quiet Asian session (nice low trading range) AS REFLECTED BY A NICE SQUAT (SMALL) DAILY CANDLE with room for lots more pips taking the average daily trading range into account. In this case (GBPJPY) the Asian session range was only about 40 pips which left room for about another 110 pips (which is exactly what we got!).
WHAT WE SHOULD ALSO DO NOW and of course when we are ready to enter a trade on the 15 min or 5 min chart is check out our "forex power" currency strength indi to see what the relative strength is of the two currencies we are thinking of trading. A GREAT IDEA too is to check the strength of the two currencies against other currencies. So in this case, we could check out GBPUSD and perhaps AUDCHF or AUDUSD. In this case we saw that GBP was strong and AUD weak - everything looked good for a winning trade!

Next at about 8.15am (GMT) we would have got the inevitable alert from our MT4 platform (15 min chart - see attachment below) that price action had broken though our session high and was now on the way up! All we have to do now is double-check our relative currency strengths and everything being OK - look for a nice place to enter our trade. Two choices really - either wait for price action to bounce off our 12 ema on the 15 min chart or even better go down to the 5 min chart (see attachment) and about half an hour later, take any bounce off the 12 ema. Using our 3 : 1 risk/reward strategy a 20 pip SL and 60 pip TP would see the trade closed in a couple of hours.

FINAL RULES AND TRADING PAIR UPDATE

Trading pairs I think best to concentrate on: XAUUSD, EURAUD, GBPAUD, GBPNZD, GBPJPY, EURJPY, AUDCHF and perhaps GBPUSD

The reason I prefer these is because they have big trading ranges (as a rule) AND because they are also well traded during the Asian session, very often their trend direction is well set (no sudden reversals!) for the European/US sessions that we are trading.

Guys, I have updated, revised and condensed our trading rules (scrap the last ones and print these out and KEEP them next to your computer!)

STRATEGY RULES

1/ (a) Just after 7.00am look at daily charts. Look for a quiet Asian session (nice low trading range) as reflected by A NICE SQUAT (SMALL) DAILY CANDLE. Check the average daily trading range indi to see how many pips are available.

(b) Check "forex power" currency strength indi to see what the relative strength is of the two currencies we are thinking of trading. Check the strength of the two currencies against other currencies.

2/ Price action should clearly breakout of Asian session high/lows as defined by our p1m1t indi (a 15 min closed candle) on 15 min charts. Set up EMAIL ALERTS around 10 pips above/below the Asian box on the currency pairs you've selected.

3/ When a 15 min chart ALERT occurs, check the average daily trading range indi to see how many pips are available. Check "forex power" currency strength indi to see what the relative strength is of the two currencies we are thinking of trading. Check the strength of the two currencies against other currencies

3/ Price action should be well above / below DAILY PIVOT POINT level in the direction of your trade

4/ The 15 min chart price action breakout must be well inside the 12 EMA and 28 EMA

5/ Go down to 5 min chart to look for a good ENTRY POINT OFF A PRICE RETRACEMENT (if necessary)

6/ ALL the EMA's need to be nicely in line above the vegas tunnel (buy trade) or below the vegas tunnel (sell trade)

7/ If price action eventually breaks through the 28 ema DO NOT TRADE anymore until the next day

8/ Do NOT trade the session before an important news release and at least half an hour afterwards (as a rule)





NEXT WEEK we'll have a look at some bad trades / trades that we will avoid by sticking to the rules!

Hi everyone

GBPJPY - looking to enter
GBPAUD - up
XAUUSD - looking to enter


Significant news on USD later but should not effect us