Breaking Points Trading System
Good day. Personally, I am not a fan of intraday trading in forex, and I lean more toward daily charts. And I strongly recommend them to beginners. But beginners do not care)) Because it seems to them that they will be able to earn many times more intraday. Sure, of course... Why am I saying this? It is hard to switch from intraday trading straight to daily charts. But there are intermediate Forex strategies that combine initial analysis on daily charts with direct entries on lower timeframes.
One of such trading systems is the Breaking Points strategy. I recommend paying attention to the basis of the strategy, those very "breakout points" (more details below). You will be able to build your own trading systems on their basis.
Characteristics of the Breaking Points forex strategy
Platform: Any
Currency pairs: GBPAUD, EURAUD, EURNZD, GBPNZD, EURJPY, GBPJPY
Timeframe: D1+M15
Trading time: Several times a week
Recommended brokers: Alpari, RoboForex
Knowledge base
- How to trade with pending orders
- "Proper" daily charts
- Support / resistance levels
The basis of the system
The Breaking Points forex strategy is based on the idea that almost every trading week, except for consolidation periods, the market moves at least 100-200 points. Our task is to enter in the direction of the market movement during the current week and exit before the end of the week. Entering "just because" is foolish, because we need to have an edge. So how should we open positions?
Those of you who trade intraday have probably noticed how the market starts to "jerk" when approaching the High and Low points of the candles of previous days (meaning the candles on the D1 chart). Why? Because these are emotionally charged levels where it is decided where the price will move next. Both big players and the crowd pay attention to these points. And after one of such levels is broken, one can say with a certain degree of confidence that a new movement is emerging.
How to enter the market?
We will enter the market directly using Buy Stop and Sell Stop pending orders. We will place our pending orders on Monday, immediately after the market opens (Friday evening is not suitable because of the danger of getting caught in a GAP).
So, the entry algorithm is as follows:
1. After the market opens on Monday, mark on the chart of the traded currency pair the High and Low levels of the previous four days (Friday, Thursday, Wednesday, and Tuesday).
2. Switch to the M15 timeframe (just change the timeframe from D1 to M15 so that the marked levels remain on the chart).
3. Place Buy Stop and Sell Stop pending orders at the levels closest to Monday's opening price (the ones we marked earlier). That is, we will have one level for sells and one for buys.
4. If a level passes very close to the opening price (less than 20 points), it should be skipped and the pending order should be placed at the next, more distant level. Also pay attention to support / resistance levels, because there is a high probability that the price will bounce off them.
5. You should enter with 2 orders. Their entry point is the same, but the take-profits will be different (see below).
Stop Loss and Take Profit
Stop loss is 30-40 points (at your discretion). In a single trade, you should not risk more than 2-3% of the deposit, because losing trades will occur from time to time. This is normal.
Take profit for the first order is 50 points, or the nearest level. For the second order, 100 points, or the next level. When the take profit of the first order is triggered, the second order should be moved to breakeven (move the stop loss to the trade's opening price).
At the end of the week, do not forget to close all orders.
For advanced traders
- More experienced players can use not two but three orders when entering a position. Leave the third order until the end of the week. Quite often this way you can earn an additional 300-500 points. Move the stop loss of the third order to breakeven at the same time as the second order.
- Advanced traders can also re-enter during the week at levels that have already worked out profitably. If there was a stop loss, you should not enter again at the same level, because there is a high chance of getting caught in choppy movement.
- One more good piece of advice: limit your total losses. For example, to 200 points per week. After your losses exceed the level you set, you no longer trade this week. This will help reduce drawdowns during consolidation periods.
P.S. The Breaking Points trading system is covered in more detail in the video lesson at the beginning of the article.
Discussion of the trading system on the forum
Respectfully, Pavel
TradeLikeaPro.ru
Breaking Points is an intermediate Forex strategy that combines initial analysis on daily charts with actual entries on lower timeframes.