Awesome Breakout Forex Day Trading Strategy

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Awesome Breakout Forex Day Trading Strategy 1

Breakout strategies are also a viable trading strategy when day trading. These types of strategies work extremely well at the open of a trading session.

This type of strategy works because at the start of a trading session, institutional traders would often take cues from each other, listening to their squawk box, observing for bid and ask price movements, and waiting for momentum to build up. As soon as a clear trend direction is established for the day, institutional traders would often go with the flow of the market. Retail traders like us have no idea what the institutional traders have in mind. Some traders wise up and use level two or depth of market to observe for bid and ask price movements, however due to the size and volume of the forex market, this seems to be too difficult to apply in forex. What we get is just the price charts on our screen and its candlesticks, which is just the result of what the institutional traders have been doing.

Even though we are at a disadvantage compared to institutional traders, the price chart is more than enough for us to observe what institutional traders are doing and capitalize on that information. One way to do this is to observe for breakouts coming from the previous sessions high and low price.

The Awesome Breakout Forex Day Trading Strategy is a breakout strategy that capitalizes on momentum breakouts out of the high and low price established during the quiet Australian trading session.

Breakout Zones

Breakout Zones is a support and resistance indicator which marks horizontal support and resistance lines based on the high and low of a trading session.

This indicator simply detects the highest and lowest price within a preset time range and marks the support and resistance lines based on it. This horizontal support and resistance are then maintained for the whole duration of the next session or up until the preset end time for that day. This creates a box or a zone which marks the range of the prior session.

The Breakout Zones indicator is an excellent indicator to use for a horizontal support and resistance breakout type of strategy.

Awesome Oscillator

The Awesome Oscillator is a momentum indicator that aids traders in identifying the direction of the current trend.

This indicator calculates for the difference between a 5-period Simple Moving Average (SMA) and a 34-period Simple Moving Average (SMA). These moving averages are not based on the close of the candles but rather based on the median of each candle.

This indicator displays trend direction as an oscillator that prints histogram bars. Positive bars indicate a bullish trend while negative bars indicate a bearish trend. The bars also change colors depending on whether the current bar has a bigger value compared to the previous bar. Green bars indicate a bigger value compared to the previous bar, while red bars indicate a smaller value compared to the previous bar. In an uptrend, green bars indicate a strengthening trend momentum, while on a downtrend, red bars indicate a strengthening trend momentum.

Trading Strategy

This breakout strategy is based on the high and low of price established during the Australian open. The market is then observed for momentum breakout movements on the Tokyo and London sessions.

The Australian open is probably the tightest ranged trading session. During this time, only AUD and NZD pairs tend to have volume. Market direction for most currencies are often initiated during the Tokyo session and continued or reversed during the London session.

To trade this strategy, we should identify momentum candles that breaks out strongly beyond the zone marked by the Breakout Zones indicator.

Momentum is then confirmed based on the Awesome Oscillator. This will be based on the direction of the trend as indicated by histogram bars, as well as the color of the bars.

If the conditions above is confirmed, then a stop entry order is placed at the high or low of the breakout candle. A take profit target is then set at twice the risk on the stop loss. Trades could be closed at the end of the session when the trade was opened or prior to the open of the next market.

Indicators:

  • breakout-zones (default settings)
  • Awesome (default settings)

Preferred Time Frames: 15-minute chart only

Currency Pairs: JPY, GBP and EUR pairs excluding AUD and NZD pairs

Trading Session: Tokyo and London open

Buy Trade Setup

Entry

  • Observe for breakout candles from the start of the Tokyo open to the first half of the London open.
  • A bullish momentum candle should break above the resistance line as indicated by the Breakout Zones indicator.
  • The Awesome Oscillator should be printing positive green bars indicating a bullish trend with increasing momentum.
  • Set a buy stop order at the high of the momentum breakout candle.
  • Wait for price to break above the momentum candle.

Stop Loss

  • Set the stop loss at the middle of the range as indicated by the Breakout Zones indicator.

Take Profit

  • Set the take profit target at 2x the risk on the stop loss.

Awesome Breakout Forex Day Trading Strategy 1

Awesome Breakout Forex Day Trading Strategy 2

Sell Trade Setup

Entry

  • Observe for breakout candles from the start of the Tokyo open to the first half of the London open.
  • A bearish momentum candle should break below the support line as indicated by the Breakout Zones indicator.
  • The Awesome Oscillator should be printing negative red bars indicating a bearish trend with increasing momentum.
  • Set a sell stop order at the low of the momentum breakout candle.
  • Wait for price to break below the momentum candle.

Stop Loss

  • Set the stop loss at the middle of the range as indicated by the Breakout Zones indicator.

Take Profit

  • Set the take profit target at 2x the risk on the stop loss.

Awesome Breakout Forex Day Trading Strategy 3

Awesome Breakout Forex Day Trading Strategy 4

Conclusion

This is a working breakout strategy that could be used by any trader as a day trading strategy.

This strategy uses the Australian session’s range to allow for a tight range and to allow trades during the Tokyo and London open.

Another popular variation for this strategy is to set the range based on the Tokyo session and trades are taken only during the London open. This allows for a very strong breakout since the London open is characterized by high volume and momentum. However, it also decreases the number of opportunities to trade since only a window of about three hours could be a viable time to open a trade.

Other traders also opt not to have take profit targets and only use trailing stops when using this strategy. This would make the strategy more profitable, but it takes discipline to trade in this manner.


Forex Trading Strategies Installation Instructions

Awesome Breakout Forex Day 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.

Awesome Breakout Forex Day 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 Awesome Breakout Forex Day Trading Strategy?

  • Download Awesome Breakout Forex Day 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 Awesome Breakout Forex Day Trading Strategy
  • You will see Awesome Breakout Forex Day 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.

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