Simple (Simplest?) Daily Breakout System

[tomorton]

This clip popped up on my Youtube page, its from Christopher Lewis, TheTraderGuy and FXEmpire.com.

Use the daily chart and add a short-term MA. If the MA slopes upwards, set a buy at the day's high, set the SL at the day's low: if the buy is triggered the next day, move the SL to b/e and then to lock in profits as price rises.

Is this the simplest strategy possible?

 

[counter_violent]

This clip popped up on my Youtube page, its from Christopher Lewis, TheTraderGuy and FXEmpire.com.

Use the daily chart and add a short-term MA. If the MA slopes upwards, set a buy at the day's high, set the SL at the day's low: if the buy is triggered the next day, move the SL to b/e and then to lock in profits as price rises.

Is this the simplest strategy possible?

Hi Tom....easy enough to code up and back test I would imagine.

Do you know any coders?

 

[tomorton]

Hi Tom....easy enough to code up and back test I would imagine.

Do you know any coders?

If I knew anyone who was a coder, I certainly wouldn't admit to moving in such dull company.

 

[tomorton]

Having fun running this. Its a challenge for me personally cos I never generally trade live, only through entry/exit orders, then just let the trades run. Getting this strategy right seems to demand real-time reaction to capture profits or limit losses.

I'm finding about a third of the orders I set each evening will trigger by the London open. None of these has so far hit the 2% stop-loss, and I'm manually closing any that get halfway back to the stop. I'm closing winners when they have a decent £ return, haven't let any reach an r:r of 1:1. Once I've got a decent daily profit in the bank, I am cancelling the outstanding orders, and in any case cancelling all outstanding orders by midday (London time). Win rate about 50% so far. Profit over 5% over 6 days.

 

[tomorton]

Actually, some slightly profitable trades I have let run to mid-pm so as to get the added impetus from the US session opening.

 

[tomorton]

Initial review of TA of trades taken and not taken with this set-up suggest its of marginal benefit only to try to introduce additional rules to refine the choice of trades. Best results come from taking all trades that fit the original simple set-up, not trying to sift further using each chart. Maybe its just so simple it can't be refined into a more advanced tool. Maybe its like an axe - you can't develop an axe into a saw.........

 

[Samipekola]

Initial review of TA of trades taken and not taken with this set-up suggest its of marginal benefit only to try to introduce additional rules to refine the choice of trades. Best results come from taking all trades that fit the original simple set-up, not trying to sift further using each chart. Maybe its just so simple it can't be refined into a more advanced tool. Maybe its like an axe - you can't develop an axe into a saw.........

Ok I think this can be work

 

[trendie]

Is this system called Hatchling Trading?

You could remove some noise by only taking the breakout of the last 2 days, instead of yesterday.
Actually, you could extend this to 3 days or more.

However, if you get to breakouts of highs and lows of past 20 days, would it become Turtle Trading? B-dum-tish!

This is essentially breakout trading for impatient people.

Maybe you could finesse the system, not through more entry rules, but perhaps with staged entries, like the turtles did, pyramiding into a winning move. Have you tried that?

 

[tomorton]

Is this system called Hatchling Trading?

You could remove some noise by only taking the breakout of the last 2 days, instead of yesterday.
Actually, you could extend this to 3 days or more.

However, if you get to breakouts of highs and lows of past 20 days, would it become Turtle Trading? B-dum-tish!

This is essentially breakout trading for impatient people.

Maybe you could finesse the system, not through more entry rules, but perhaps with staged entries, like the turtles did, pyramiding into a winning move. Have you tried that?

I am looking at ways to refine this, though any moves to exclude certain entry signals seem like they're going to be marginal only.

One thing I am looking at which might be useful. The most serious risk on a 1-day break-out trade like this is that the entry signal gets triggered and then price reverses and goes through the stop. The day would print as an Outside Day on a swing chart, having breached both the high and low of the prior day. The narrower the range of the prior day, the more likely this is to happen, which argues for excluding entry signals generated by narrow range days.

But a wide range day also presents risks. If price has already made an extraordinary move today, is it not more likely to make a small move or even retrace somewhat tomorrow?

So maybe excluding signals from narrow range bars, whether Inside Days or not, might be prudent.

 

[trendie]

I am looking at ways to refine this, though any moves to exclude certain entry signals seem like they're going to be marginal only.

One thing I am looking at which might be useful. The most serious risk on a 1-day break-out trade like this is that the entry signal gets triggered and then price reverses and goes through the stop. The day would print as an Outside Day on a swing chart, having breached both the high and low of the prior day. The narrower the range of the prior day, the more likely this is to happen, which argues for excluding entry signals generated by narrow range days.

But a wide range day also presents risks. If price has already made an extraordinary move today, is it not more likely to make a small move or even retrace somewhat tomorrow?

So maybe excluding signals from narrow range bars, whether Inside Days or not, might be prudent.

You are kind of out-thinking yourself.
You have a reason not to trade if its a narrow range. You also give yourself a reason not to trade a wide range.

 

[tomorton]

You are kind of out-thinking yourself.
You have a reason not to trade if its a narrow range. You also give yourself a reason not to trade a wide range.

That's definitely a danger I am prone to - over-thinking a system But it would be nice to eliminate the outliers at the high end and the low end of the strategy. Trouble is I have tried to do similar things in the past and just ended up eliminating the winners too as you suggest. Oh well...........

 

[tomorton]

As 24/12 sessions were low volume and curtailed, ranges are very narrow, so I am combining 21/12 and 24/12 ranges for orders and stops for 26/12 where necessary. Expect to do likewise for 31/12.