Trading is all about probabilities. It is not about luck and it is not about chance. It is about finding repeating scenarios which point us towards the right trade direction more often than not. It could also be about finding patterns and conditions which has a relatively high degree of resulting in a trend. These are what we call high probability or high yield trade setups.
There are many different trade strategies and setups that allow for either a high probability trade or a high yield trade. However, only a few could incorporate both. Momentum trade strategies are one of those that could produce both. It could yield high returns and it has a relatively high probability of success.
Momentum trading is a very profitable type of trading strategy. This is because market participants often think with the crowd. Traders see prices rising so they would also start buying pushing price higher. If they see prices falling quickly, they would also panic and sell quickly causing price to drop even more. Momentum market movements are very strong. It would be wise to trade with it rather than against it.
100 Pips Momentum Breakout Indicator
Table of Contents
- 1 100 Pips Momentum Breakout Indicator
- 2 Relative Strength Indicator (RSI)
- 3 Trading Strategy
- 4 Conclusion
The 100 Pips Momentum Breakout indicator is a custom momentum indicator which is part of the Oracle trading system. It is made up of two modified moving averages which are characteristically very fast and responsive yet are also very smooth. Its fast response provides trade signals that have less lag compared to other moving averages, while its smoothness provides stability and accuracy.
This indicator is very much useful during a trending market condition. In a trending market, price would typically respect the moving averages as a dynamic support or resistance. Trend reversal signals provided by the crossover of the moving averages also provide high probability trade signals. The combination of having less lag and accurate trade signals allow traders to catch the trade early on and ride the trend for as long as possible.
Relative Strength Indicator (RSI)
The Relative Strength Indicator (RSI) is a staple indicator which is very popular among traders. This is because of its versatility and usefulness. Both Mean Reversal and Momentum traders could benefit from using this indicator.
The RSI is an oscillating momentum indicator. It is bounded within a range of zero to 100, having its midline at 50. The market is considered bullish whenever the RSI is above 50 and bearish if it is below 50. Momentum traders use this crossover to signal a trade entry based on the reversal of a trend.
It also has an oversold marker at 30 and an overbought marker at 70. Price is considered oversold whenever the RSI is below 30 and overbought whenever it is above 70. Mean Reversal traders would typically use the overbought and oversold markers as an indication that price could reverse at any time.
This strategy is a simple momentum strategy using candlesticks and indicators to indicate momentum and trend reversals.
To trade this strategy, we should first be looking for a confluence between the 100 Pips Momentum Breakout indicator’s crossovers and the RSI line crossing over 50. Having a confluence of both signals would indicate a possible trend reversal with a relatively high degree of accuracy.
Then, as soon as we find a confluence of both indicator’s signals, we should judge the candlestick on which the reversal has occurred, whether if it is a momentum candle or not. We will consider full-bodied long candles as momentum candles. These candles should also be significantly larger than the previous candle. Candles that have these characteristics and are in confluence with the trend reversal signals of the 100 Pips Momentum Breakout and RSI would be considered as a valid trade signal.
- Relative Strength Indicator
- 100pips Momentum_BO.ex4
Timeframe: 15-minutes, 1-hour, 4-hour and daily charts
Currency Pairs: major and minor pairs
Trading Session: any if using higher timeframes; if using 15-minute charts, trade on the session of one of the currencies in a pair
Buy Trade Setup
- Price should cross above the blue and red lines of the 100 Pips Momentum Breakout indicator
- The blue line of the 100 Pips Momentum Breakout indicator should cross above the red line indicating a bullish trend reversal
- The RSI line should cross above 50 indicating a bullish trend reversal
- The candle in confluence with the above signals should be a momentum candle
- Enter a buy order on the confluence of the above conditions
- Set the stop loss on the support level below the entry candle
- Close the trade as soon as price closes below the red line
Sell Trade Setup
- Price should cross below the blue and red lines of the 100 Pips Momentum Breakout indicator
- The blue line of the 100 Pips Momentum Breakout indicator should cross below the red line indicating a bearish trend reversal
- The RSI line should cross below 50 indicating a bearish trend reversal
- The candle in confluence with the above signals should be a momentum candle
- Enter a sell order on the confluence of the above conditions
- Set the stop loss on the resistance level above the entry candle
- Close the trade as soon as price closes above the red line
Momentum strategies are one of the most profitable trading strategies. In fact, momentum traders are usually the ones who can grow their trading accounts exponentially.
This momentum strategy is also a high yield, high probability trade strategy. Traders who could identify the right momentum trade setups could easily multiply their profits. The key with this strategy is in identifying the right momentum candles.
Momentum trading is one which is very fast paced. After a momentum candle, the market could stall for a bit prior to the next expansion phase. However, having the confluences above should mean that the trend has already reversed. Because of this lull prior to the next expansion, traders should learn to manage their emotions not closing the trade prematurely. It is also important to learn how to trail the stop loss at a right distance in order to protect profits.
Forex Trading Strategies Installation Instructions
100 Pips Momentum Breakout Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.
The essence of this forex strategy is to transform the accumulated history data and trading signals.
100 Pips Momentum Breakout Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.
Based on this information, traders can assume further price movement and adjust this strategy accordingly.
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How to install 100 Pips Momentum Breakout Forex Trading Strategy?
- Download 100 Pips Momentum Breakout Forex Trading Strategy.zip
- *Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
- Copy tpl file (Template) to your Metatrader Directory / templates /
- Start or restart your Metatrader Client
- Select Chart and Timeframe where you want to test your forex strategy
- Right click on your trading chart and hover on “Template”
- Move right to select 100 Pips Momentum Breakout Forex Trading Strategy
- You will see 100 Pips Momentum Breakout Forex Trading Strategy is available on your Chart
*Note: Not all forex strategies come with mq4/ex4 files. Some templates are already integrated with the MT4 Indicators from the MetaTrader Platform.
Click here below to download: