Good afternoon, dear colleagues, traders! Today I will review a fairly profitable breakout strategy. The strategy is quite simple, its principle is based on the breakout of price levels identified in the time period from 03:00 – 08:00 Greenwich Mean Time (GMT).
Additionally, the strategy uses moving averages, their main purpose is to filter signals.
Conditions for applying the breakout strategy:
Currency pair – EURUSD, GBPUSD (when applied on other pairs, I recommend testing the strategy);
Timeframe – H1.
Moving Average – set on the chart two exponential moving averages with a period of 144 and 169, as well as one simple with a period of 400.
Conditions for opening positions
Determine the highest maximum (High) and minimum (Low) among the 6 candles on the time frame from 03:00 GMT to 08:00 GMT.
The strategy will be considered on the terminal from the broker Alpari… The time difference in the terminal from GMT is +2 in winter and +3 in summer. That is, in winter, we consider the period from 05:00 to 10:00, in summer from 06:00 to 11:00.
So, after the candle closes at 08:00 GMT, we have determined the maximum and minimum, then we place pending orders:
– Buy stop 5 pips above High;
– Sell stop 5 pips below Low.
But provided that the distance from the level of placed orders to the channel of 144-169 EMA and 400 SMA is at least 35 points.
Stop Loss Level:
– when placing a Buy stop order 3 points below Low;
– when placing a Sell stop order 3 points above High.
The take profit level is equal to the distance between the High and Low of the analyzed time period (03:00 – 08:00 GMT). When the price in a given time period is squeezed in a narrow corridor and when placing orders, the desired profit will be less than 20-25 points, then when setting a take profit, I advise you to add +15 points to it.
I also recommend moving the stop loss to breakeven when ½ of the desired profit is reached.
If the price is between the channel of 144-169 EMA and 400 SMA, then entering the market is not considered. Do not forget that there should be at least 35 points from the entry point to the moving ones.
If, when the pending order is triggered, the take profit on the trading day is not reached, then we leave the open position until the next trading day.
If the trend continues on the next day, then we hold the position until the desired profit is obtained. If you want to place a pending order already for a new trading day, while the old one is open, then enter the stop loss and take profit adjustments for the open position based on the analysis of the new day.
If the goals are not achieved on a new trading day, then repeat the same procedure the next day.
Download archive with strategy template – Breakout strategy
That’s all for today. Happy strategy implementation! Goodbye.
Best regards, Evgeny Bokhach
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