Simple Combined Breakout System for EUR/USD and GBP/USD

By Hans

· Determine the 06.00 CET – 10.00 CET High Low on EUR/USD and GBP/USD
· Determine the 10.00 CET – 14.00 CET High Low on EUR/USD and GBP/USD
· Set BuyStop at High + 5 pips and SellStop at Low - 5 pips for both timeframes and both currencies
· Set Target Price at entry + 80 pips for EUR/USD and entry + 120 pips for GBP/USD
· Set StopLoss at entry - 50 pips for EUR/USD and entry - 70 pips for GBP/USD. If the other side of the breakout is within 50 pips for EUR/USD or within 70 pips for GBP/USD then the StopLoss will be that level (Longtrade: SL = Low range - 5 pips = SellStop; Shorttrade: SL = High range + 5 pips = BuyStop)
· Move the SL to breakeven after a gain of 30 pips for EUR/USD and a gain of 40 pips for GBP/USD
· If a certain position is taken and price turns agains you and it breaks the other side of the breakout channel then turn. If the breakout channel is broader then the stoploss first the stoploss will be hit. If the breakout channel is narrower then the stoploss then hitting the other side means that you have to turn your position. There is only one turn per time frame possible
· At 24.00 CET all orders expiring and close all trades at market. On Friday we do the same at 23.00 CET.
This link displays the time in every major city in the world: www.qlock.com. I am using CET time (Amsterdam, Frankfurt).

Results October 2005:

10/03 : -22 pips
10/04: -61 pips
10/05: -103 pips
10/06: +168 pips
10/07: +156 pips
10/10: +135 pips
10/11: +61 pips
10/12: +108 pips
10/13: +97 pips
10/14: +274 pips
10/17: +178 pips

Total: +991 pips

The results this month are extreme. In general the system gives you an average return of 600 pips a month from March 2005.

On monthly basis the results are:

March 2005: +721 pips
April 2005: +940 pips
May 2005: +296 pips
June 2005: +857 pips
July 2005: +1,352 pips
August 2005: + 35 pips
September 2005: -20 pips
October 2005: +1,825 pips
November 2005: +554 pips
December 2005: +345 pips
January 2006: +73 pips
February 2006: -13 pips
March 2006: +633 pips
April 2006: +617 pips

All calculations before October 2005 are done by hand, so it is possible that there is a small deviation. It is only to show the power of such a simple system. Maybe someone can program this for Metatrader 4.

I think the first High/Low range from 08.00 CET until 12.00 CET is slightly better. Also GBP/USD has an advantage, but the combination of the two timezones and the two currency pairs gives the system an interesting profit on average every month.

You can also consider to trade USD/JPY and USD/CHF with this system. I think the overall result will improve if you trade the four majors with this system.

always set BuyStop and SellStop orders. So I take every breakout. Sometimes there is a rebound and you can enter the trade with a better price. But there are always breakouts without a rebound and than you miss some very profitable trades. That's the raison I take every breakout, because you never know which breakout will rebound.

Time difference :

08.00 CET (Amsterdam, Frankfurt) = 02.00 New York Time. So in New York it's six hours earlier.

System Rules :

Profit Target for EUR/USD is 70 pips.
Profit Target for GBP/USD is 100 pips.
Orders will be cancelled at 20.00 CET instead of 24.00 CET.
Trades will not be closed at 24.00 CET. I close them manually the next day when I am able to login.

Maybe setting a stoploss (try 50) and a profit target (try 80) will produce more realistic results.

My exit strategy is the one I posted: close all positions at 24.00 CET.

I did a manual backtest on a 4H timeframe. When there was a problem (two breakouts, which one was first), I looked at smaller timeframes if available. .

All positions are opened when triggered. You place your orders at 10.00 CET and 14.00 CET.

In the beginning I only moved my stops to breakeven after reaching a 30 pips profit for EUR/USD and a 40 pips profit for GBP/USD. I didn't had a trailing stop. So your results may be different.

I trade this system manually and I don't use a trailing stop (I only move my SL to breakeven after reaching a certain profit), but I had a loosing day on 10/03, 10/04, 10/05 and 10/18 for GBP/USD.

My results of the last 2 days for both currencies together:

10/18: -70 pips
10/19: +166 pips

So far this month: +1,118 pips

I use StrategybuilderFX - Metatrader - demo account, version 4.00 build 183. The time on the charts is the same time as my clock on the wall shows.

Hans

Required Indicators :

SDX Breakout

Required Expert Advisor:

HansEA - This is EA (expert advisor ) for this system

Note : If you have any question regarding this system just visit this link

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