Good day, traders!
In this topic I will share with you a breakout trading strategy. I will try to tell you enough details so that you can trade it yourself. And I will attach a link to the free expert advisor with live trading monitoring of the real account.
Theory: price movement can be decomposed into two main phases — accumulation and distribution.
We will use this phases to extract profit. The algorithm is simple:
- Identify an accumulation (shrinking price range).
- Open a trade at the beginning of the distribution (range breakout).
- Close the trade by take, stop, trailing stop or timeout.
- Repeat everything again starting from point 1.
Identify accumulation
- X = period of calculations (EntryPoint in BOA System)
- k = koefficient (Sensitivity in BOA System)
- KPD = ( HighestHigh - LowestLow ) / ( ATR * X ) * 100
If KPD < Average_KPD - k*Standard_deviation_KPD it means that accumulation took place and we have to wait for beginning of distribution.
Signal to open trade
- Breakup of HighestHigh(X) is a signal to trade long
- Breakdown of LowestLow(X) is a signal to trade short
Calculation of Stop Loss,Take Profit and Trailing
Everything is calculated as a percents of initial HighestHigh(X) - LowestLow(X). For example: StopLoss = 50, means that the size of stop loss will be equal to (HighestHigh - LowestLow) * 0.5
Link to the free exper advisor
https://www.mql5.com/en/market/product/63533
That is how this system works in strategy tester for USDJPY
