Break-out Zones Forex Trading Strategy
The break-out zones forex trading strategy is built on three important custom indicators i.e. the buysell5secret, breakout-zones and the bands custom indicators.
The strategy is designed to give traders a profitable system that can ride the market during trendy, while keeping you from being trapped by range bound conditions.
MetaTrader4 Indicators: buysell5secret.ex4 (default setting), breakout-zones.ex4 (default setting), Bands.ex4 (2 standard deviation)
Preferred Time Frame(s): 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours
Recommended Trading Sessions: Any
Currency Pairs: (USD/CHF, EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CAD, NZD/USD, EUR/CHF)
Buy Example (click the image for full size):
Long Entry Rules:
Initiate a buy entry when the following conditions are on display on the activity chart:
- The buysell5secret line custom indicator changes its color to blue, with a blue arrow attached to lower side of the indicator line (usually pointing upwards). The blue arrow also mirrors itself on the chart window below price bars, as it simultaneously forms alongside the arrow on the indicator window. Hence, we have 2 signal arrows for same indicator (one attached to the chart window and the other on the indicator window).
- If price is moves pass the upside of the breakout-zones custom indicator line, then it reinforces our bullish signal.
- If price breakouts to the upside of the Bands custom indicator after some sessions of contraction of the bands, then a buy trend is lurking.
Stop Loss for Long Entry: Place stop loss at convenient level below the lower horizontal line of the breakout-zones custom indicator (having in mind your personal money management strategy).
Exit Strategy/Take Profit for Long Entry
The following conditions will inform our exit or take profit move:
- The buysell5secret line custom indicator changes its color to yellow with a red arrow attached to the yellow line pointing downward and another red arrow on the chart window pointing downward as well.
- If price breaks the second breakout-zones horizontal line on its way downward, then an exit is advised.
- Contraction of the Bands custom indicator on the chart window, signifies market contraction as well and resultant low market volume.
Sell Entry Rules
The following chart/indicator patterns will define a sell entry base on the following rules:
- The buysell5secret line custom indicator changes its color to yellow, with a red arrow (pointing downward) attached to the indicator line from the inside. The red arrow also forms on the chart window (pointing downward), a signal that price is being pushed lower.
- If price breaks the second horizontal line of the breakout-zones custom indicator on its way downward, a sell is eminent.
- Following some sessions of contraction of the Bands custom indicator widens and price breakouts to the downside, signaling a bearish signal.
Stop Loss for Sell Entry: Place stop loss at convenient level above the top line of the breakout-zones custom indicator (considering your personal money management strategy).
Exit Strategy/Take Profit for Sell Entry
The following rules should define your exit or take profit strategy:
- The buysell5secret line custom indicator turns blue with an arrow facing upward, with a blue arrow also attached to the chart window pointing upwards as well.
- if we experience some momentary retracement and price breaks the second breakout-zones horizontal line upward, then an exit should be triggered.
- The Bands indicator contracts, it is indicative of low volumes, you should think towards exiting you position(s).
About The Trading Indicators
The buysell5secret custom indicator is designed by a German by name Karl Dittmann. It deploys a triple alert system to confirm a signal i.e. an arrow in the chart window, color change on the indicator line and another arrow attached to the line indicator within the indicator window.
The breakout-zones custom indicator plots medium term support and resistance horizontal line on the chart window.
The Bands indicator is a modified Bollinger Bands plotted on 20-period simple moving average as its middle line and 2 standard deviation away from the middle line.