Many of the world’s top forex traders trade breakouts for big profits, and we can agree to the fact that although it’s not an entirely new concept, traders have continued to take advantage of this idea.
The 5 Day Breakout Forex strategy is designed to take advantage of levels where the price moves out of its 5-day trading range.
Once price exceeds the range of the 5-day high or low, a breakout is said to occur.
Having the understanding that markets usually spend most of the time in trading ranges makes this a worthwhile trading strategy to own in your trading arsenal.
Let’s dissect the trading setup with the following examples to see how it all it plays out.
Chart Setup
MetaTrader4 Indicators: 5-day-breakout.ex4 (Default Setting), Simpler Trend.ex4 (Inputs Variable Modified; Average period=60, Sensitivity=4), macd-rising-falling.ex4 (Inputs Variable Modified; FastEma=24, SlowEma=52, SignalEma=18)
Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week
Recommended Trading Sessions: Any
Currency Pairs: Any pair
Download
Download the 5 Day Breakout Forex Strategy
Buy Trade Example
Fig. 1.0
Strategy
Long Entry Rules
Enter a bullish trade if the following indicator or chart pattern gets put on display:
- If the green price bars of the Simpler Trend indicator is seen to form above the 5-day-breakout indicator high (represented by the red horizontal line on the 0.71488 mark), price is said to breakout to the upside, thus a buy signal will suffice.
- If the gold & lime histograms of the macd-rising-falling Metatrader 4 custom indicator is seen to stack up above the 0.00 signal level as depicted on Fig. 1.0, price is said to be taken higher i.e. a signal to buy the selected currency pair.
Stop Loss for Buy Entry: Place stop loss below support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit from all trades if the following rules or conditions takes precedence:
- If the candles of the Simpler Trend indicator turns red during a bullish signal or its candles fall back into the 5-day-breakout indicator range, bullish sentiment is said to be weaning, as such an exit or take profit is duly recommended.
- If the macd-rising-falling indicator pops up a red histogram that is aligned below the 0.00 center line while a bullish trend is running, it is an indication to exit or take profit at once.
Sell Entry Rules
Go short if the following setups gets displayed successfully on the activity chart:
- If the red price bars of the Simpler Trend indicator is seen to form below the 5-day-breakout indicator low (represented by the red horizontal line on the 145.856 mark), price is said to breakout to the downside, hence a trigger to sell the selected forex pair.
- If the gold & red histograms of the macd-rising-falling custom indicator is seen to pile below the 0.00 signal level as illustrated on Fig. 1.1, price is said to be driven lower i.e. a signal to sell the designated forex pair.
Stop Loss for Sell Entry: Place stop loss above resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes center stage:
- If the candles of the Simpler Trend indicator reverts to green while a bearish trend is running or its candles rises back into the 5-day-breakout indicator range, bearish sentiment is said to be halting, as such an exit or take profit is advised.
- If the macd-rising-falling indicator pops up a lime histogram that is placed above the 0.00 center line while a bearish trend is ongoing, it is an indication to exit or take profit forthwith.
Sell Trade Example
Fig. 1.1
Free Download
Download the 5 Day Breakout Forex Strategy
About The Trading Indicators
The 5.day-breakout.ex4 indicator is a technical tool that outlines the high and low on the previous 5-days.
The Simpler Trend.ex4 custom indicator is a trend indicator that comes along with a default period of 30, but is adjustable in line with the user’s preference.
The macd-rising-falling.ex4 indicator is a trend-seeking momentum indicator that reveals the connection between two moving averages of price.