Breakout - 15 Minutes a day - 10-20 pips - Every day - 95% profitable trades

This is an extremely simple breakout system and it works as follows:

If previous day high is exceeded by 3 pips + spread = buy TP = 5 pips SL = 10 pips
If previous day low is exceeded by 3 pips + spread = sell TP= 5pips SL = 10 pips

Works on the principle that once a breakout occurs,its most likely to travel quite a bit in the direction of the breakout due to the sudden surge of market orders and other entry orders pilled up at these levels.
5 pips is conservative,the price may and does travel much further but this is a very easy way to make consistent profits - almost every day.
Due to the tight stops I use extreme amounts of leverage,I risk as much as 5% of my account per trade.

Stick to the pairs with the lowest spreads for obvious reasons.

Happy piping!

welcome garb,

surely you can do better then 70 pips a month

5 pips??? Thought you said "travel quite a bit in the direction".

shadowninja said:

5 pips??? Thought you said "travel quite a bit in the direction".

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As I said,extreme amounts of leverage,I often buy 50 lots with this strategy,that is like making 250 pips on a single lot,you get my point,due to its high success ratio you can afford extreme amounts of leverage and the stops are always tight,if you cant appreciate 5 pips then that's your problem.

Elefteros said:

welcome garb,

surely you can do better then 70 pips a month

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Yes ofc you can if you wanna babysit the position,but I make a nice income just from this strategy,as I said,odds stacked in your favor,leverage to the hilt.
And I also do 4 currency pairs,not just 1 - diversification of sorts in case one just doesn't work out.

This strategy seems really really simple! How did you come up with it?

Do you set pending orders when you wake up in the morning or do you wait until the middle of the night when the daily bars change over?

What about slippage?

Garbanzo said:

As I said,extreme amounts of leverage,I often buy 50 lots with this strategy,that is like making 250 pips on a single lot.

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I'ts also like losing 500 pips on a single lot. do you get my point

if it works for you though that's great. I wasn't flaming you i started with welcome but you seem to have taken offence to mine and shadows comments and I fear that if your that easily offended you wont like it here.

The ****'s right.

Elefteros said:

I'ts also like losing 500 pips on a single lot. do you get my point

if it works for you though that's great. I wasn't flaming you i started with welcome but you seem to have taken offence to mine and shadows comments and I fear that if your that easily offended you wont like it here.

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Yes,but when probability is on your side and when you are "diversified" on 4 pairs its not really such a great issue.
Sure,you could get a day where all 4 pairs go against you and you lose 40 pips and you get a margin call or you get wiped out.
I rarely trade to the hilt with 50 lots but I am just saying,since the odds are stacked so much in your favor you can afford to take allot of risk to.
I rarely trade with such large positions but I was just giving it to you for illustration purposes,trying to make you realize that when 5 pips is "certain" its not that bad at all,you can make a real living out of it - that's what I do.
I am sorry If I offended you.

*Hugs elefteros*

Btw,eisai ellinas?

pvisser said:

This strategy seems really really simple! How did you come up with it?

Do you set pending orders when you wake up in the morning or do you wait until the middle of the night when the daily bars change over?

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I am based in Eastern Europe and my broker (FXCM) uses 5 P.M EST as the start and end of the day so that's 12pm for me.

Oh and yes,I do use entry orders

Try and avoid setting orders in the opposite direction when theres an obvious trendline just above or bellow the candle because the price might be penetrated and then just jump back right away before touching your 5 pip take profit.

here is a way to trade breakouts. can you see it?

Imagebin - A place to slap up your images.
















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abello said:

here is a way to trade breakouts. can you see it?

Imagebin - A place to slap up your images.




/

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Pattern based trading?
I've found out myself through blowing my first account up that spending allot of time in front of a screen blurs your judgement.
For me,I prefer the 15 minutes of work once a day.

Garbanzo said:

Yes,but when probability is on your side and when you are "diversified" on 4 pairs its not really such a great issue.
Sure,you could get a day where all 4 pairs go against you and you lose 40 pips and you get a margin call or you get wiped out.
I rarely trade to the hilt with 50 lots but I am just saying,since the odds are stacked so much in your favor you can afford to take allot of risk to.
I rarely trade with such large positions but I was just giving it to you for illustration purposes,trying to make you realize that when 5 pips is "certain" its not that bad at all,you can make a real living out of it - that's what I do.
I am sorry If I offended you.

*Hugs elefteros*

Btw,eisai ellinas?

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I wasn't offended mate, but i thought you was by your aggressive response knowing now that you are Greek, katalava you are just been Greek (i shouldn't assume just cause you speak the lingo but i will)

What gave me away, user name maybe

ok serious advice now re, if your doing this for your bread move away from fxcm and go with someone like Interactive brokers much lower spreads, You could add the diff to your target and make 6,7 pips a day.

p.s where in eastern europe gives you an est -5hours time?

Elefteros said:

I wasn't offended mate, but i thought you was by your aggressive response knowing now that you are Greek, katalava you are just been Greek (i shouldn't assume just cause you speak the lingo but i will)

What gave me away, user name maybe

ok serious advice now re, if your doing this for your bread move away from fxcm and go with someone like Interactive brokers much lower spreads, You could add the diff to your target and make 6,7 pips a day.

p.s where in eastern europe gives you an est -5hours time?

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Hey
Nah am not native Greek but was born in Greece and spent almost my entire childhood there.
I am currently residing in Romania and the current timezone differential between Romania(GMT+2) and New York (EST) is 6 hours,so the daily candle is complete for me at 11 PM my local time during summer because New York becomes -4GMT from he standard -5GMT.

Timezones are such a headache

I started out with a very small account (1000$) and managed to turn it into over 8000$ over the course of 9 months while I was still 17 (account under mom's name) with FXCM,I have really no complaints against their execution and got very few issues with them pertaining to slippage and sudden jumps in spreads that are unjustified.
I looked at IB when making my search for my first broker but didn't open an account because of their minimum account opening balance requirement (5000$ I think),I will open one one of these days,thanks for reminding about em.

In case anyone is interested, I just tested this system very briefly. It's just under 90% accurate, not 95%. I put the daily data into MS Access and took the number of pips it went above the previous days high or the number of pips below the previous days low. Some days both the previous highs and lows were broken. Between 04/01/1999 and 27/10/2009 the GBP/USD broke the previous day's extremes 3030 times - in 399 of these cases it failed to go above or below the extreme by 10 pips or more. So I'd say it's about 86% right.

I'll attach the results in text. The Open, High, Low, Close, Previous High, Previous Low, Number of Pips above Previous High, Number of Pips below Previous Low.

Davidee said:

In case anyone is interested, I just tested this system very briefly. It's just under 90% accurate, not 95%. I put the daily data into MS Access and took the number of pips it went above the previous days high or the number of pips below the previous days low. Some days both the previous highs and lows were broken. Between 04/01/1999 and 27/10/2009 the GBP/USD broke the previous day's extremes 3030 times - in 399 of these cases it failed to go above or below the extreme by 10 pips or more. So I'd say it's about 86% right.

I'll attach the results in text. The Open, High, Low, Close, Previous High, Previous Low, Number of Pips above Previous High, Number of Pips below Previous Low.

Click to expand...

Actually the numbers may be slightly different than that for the simple reason that a breakout could occur and travel a few pips in your direction and suddenly turn around,hit your stop loss and then come back and continue traveling in the direction of the breakout.
But this is something you cannot back test with MS access I guess.
But taking your numbers we can calculate the following:

Risk = 10 pips
Reward = 0.5R
(0.86*0.5) - (0.14*1)
0.43-0.14 = 0.29

So every trade we take has a positive expectancy to earn us 3 pips.
This includes the spread because your numbers indicate price fails to travel by 10 pips about 14% of the time while our profit target is only 5 pips so your choice of using 10 pips actually means that its slightly better than 86%.
Another thing I do is I use allot of discretion when placing orders,a big chunk of these of these 399 failures (id say as much as half of them) could be avoided if the user of this strategy avoided placing orders at points of major resistance, weekly high's,monthly high's significant psychological levels or major trendlines.
So filtering these out would bring you much close to 90%+.
Another technique I use is to divide my capital between 4 pairs,this ensures that almost every single day I am profitable to one extent of another because there are many occasions on witch a pair may simply not breakout.
Again,the key to this strategy is allot of leverage.

Thank you for actually taking the time to get this data - all my back testing initially was by eyeballing charts for a period of 2 months - that took awhile

Could you perhaps give us numbers for other currency pairs too?


Thank you again

If you don't mind me asking how many trades have you done using this system (how long have you been doing it), I could test this properly with 5 minute data if you like and tell you exactly what the maths say.

Hi,

I did your exact system on the EUR/USD data I just pulled from Metatrader - I did only a break of 3 pips or more and a target of 5 pips (8 pips greater than the break). It goes from 24/09/2001 to 23/09/2009.

There are 1973 trades and 168 of them are losses. That's about a 91.5% win rate.

But the thing is I just don't buy your 10 pip stop loss working and the win rate remaining, that assumes it reaches it's extreme high or low after the break, we need 5 minute data to test this properly.

Also, with with 5 pips and spread of say, 2 points that's 3 pips for you and 2 for the broker, a commission of 40% on your winnings.