Buzzer Breakout Forex Trading Strategy

0
656
Buzzer Breakout Forex Trading Strategy

We often hear seasoned traders talk about the “trading edge”. We often hear traders talk about strategies having an edge or even traders having an edge against the market. But what is it really? What does “trading edge” really mean?

The dictionary has many definitions for the word “edge”. However, there is one definition that captures what traders are talking about – “a quality or factor that gives superiority over close rivals or competitors.” This is the kind of edge that traders are looking for, an advantage against the market.

So, how would we know if a trader has an edge? Simply by looking at the trader’s profitability over the long run. Either the trader wins more often than he loses, or he wins bigger than when he loses.

How would we know if a strategy has an edge? The same way we assess a trader’s edge – profitability over the long run, win rate and reward-risk ratio. Either the strategy is winning more than 51% of the time or the strategy gains more than $1.00 for every dollar it loses. Often, it is a combination of both.

The Buzzer Breakout Forex Trading Strategy is a strategy with a winning edge. It has combination of a decent win rate and a reward-risk ratio that gains twice the amount of its losses. If you are looking for a strategy with a winning edge, then this strategy might be for you.

Using a confluence of four technical indicators, this strategy ensures a high probability trade entry based on the prevailing trend.

50-Period Simple Moving Average

The 50-period Simple Moving Average (SMA) is a widely used trend indicator used by many traders. Many professional traders use the 50 SMA as a trend filter, trading only in the direction of the trend indicated by the 50 SMA.

Traders often use the 50 SMA to indicate trend direction based on the location of price in relation to it. Trend direction could also be based on the direction of the slope of the 50 SMA.

Buzzer Indicator

The Buzzer indicator is a custom indicator that indicates momentum based on the slope of a modified moving average.

The indicator draws a line much like the usual moving average. However, this moving average line is very responsive, following the movement of price quite closely. This lessens the lag between price movement and the Buzzer line.

The line then changes color depending on the direction of its slope. Markets with bullish momentum have a lime colored Buzzer line, while markets with bearish momentum have a red colored Buzzer line.

CCI Histogram

The CCI Histogram indicator is a custom technical indicator based on the Commodity Channel Index (CCI).

The CCI is an oscillating indicator based on the concept of Typical Price. The Typical Price is simply an average of the high, low and close of a candle. The Simple Moving Average of the Typical Price is then subtracted from the current Typical Price and is adjusted for the Mean Absolute Deviation. The result is an oscillating technical indicator that oscillates within the range of -100 to +100 around 85% of the time.

The CCI Histogram is a variation of the CCI that draws histogram bars on the oscillation. These bars change colors depending on whether it is detecting a trend or not. Royal blue bars indicate a bullish trend while red bars indicate a bearish trend. Bars that are colored dark gray indicate that the indicator still has not detected a trend.

Bill Williams ATZ BO

The Bill Williams ATZ BO indicator is a custom indicator which provides high probability trade signals. These trade signals are based on the short-term trend momentum.

The indicator simply places an arrow pointing the direction of the short-term momentum whenever it detects a viable trade entry.

Trading Strategy

This strategy is a simple strategy based on the confluence of the four indicators above.

The 50 SMA will be used as the main trend filter. Trades should be in the direction of the trend based on the location of price in relation to the 50 SMA as well as the slope of the 50 SMA.

The CCI Histogram indicator will also serve as a trend filter indicator. Trades will be considered only when it agrees with the direction of the trend as indicated by the CCI Histogram. Trades are taken only when the bars are either colored royal blue or red.

The Buzzer indicator will serve as the confirmation for the short-term trend. Trades will be considered only when it agrees with the direction of the trend based on the color of the Buzzer line.

Lastly, the Bill Williams ATZ BO will serve as the entry signal. When all the trend indicators above have aligned, trades could be taken whenever the Bill Williams ATZ BO indicator provides a signal in the direction of the prevailing trend.

Indicators:

  • 50 SMA (green)
  • CCI-Histogram (default setting)
  • buzzer (default setting)
  • Bill Williams ATZ BO (default setting)

Preferred Time Frames: 15-minute, 30-minute, 1-hour, 4-hour and daily charts

Currency Pairs: major and minor pairs

Trading Session: Tokyo, London and New York

Buy Trade Setup

Entry

  • Price should be above the 50 SMA line.
  • The 50 SMA line should be sloping up.
  • The Buzzer line should be color lime indicating a bullish short-term trend.
  • The CCI Histogram should have royal blue bars indicating a bullish trend.
  • The Bill Williams ATZ BO indicator should print an arrow pointing up.
  • Enter a buy order on the confluence of the conditions above.

Stop Loss

  • Set the stop loss on the fractal below the entry candle.

Take Profit

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

Buzzer Breakout Forex Trading Strategy

Buzzer Breakout Forex Trading Strategy 2

Sell Trade Setup

Entry

  • Price should be below the 50 SMA line.
  • The 50 SMA line should be sloping down.
  • The Buzzer line should be color red indicating a bearish short-term trend.
  • The CCI Histogram should have red bars indicating a bearish trend.
  • The Bill Williams ATZ BO indicator should print an arrow pointing down.
  • Enter a sell order on the confluence of the conditions above.

Stop Loss

  • Set the stop loss on the fractal above the entry candle.

Take Profit

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

Buzzer Breakout Forex Trading Strategy 3

Buzzer Breakout Forex Trading Strategy 4

Conclusion

This strategy is one which has a clear trading edge. It provides trade setups that have a relatively high probability of a win and has a fixed reward-risk ratio of 2:1.

This strategy works well on trending market conditions. However, it is best to avoid using this strategy on an overextended trend or one which has a momentum that is slowing down.

Trade wisely.

Recommended MT4 Broker

  • Free $50 To Start Trading Instantly! (Withdrawable Profit)
  • Deposit Bonus up to $5,000
  • Unlimited Loyalty Program
  • Award Winning Forex Broker
  • Additional Exclusive Bonuses Throughout The Year

Recommended broker

>> Claim Your $50 Bonus Here <<

Click here below to download:

Save

Save



Get Download Access

LEAVE A REPLY

Please enter your comment!
Please enter your name here