Volatility Breakout Forex System - Part 6

Categories: Volatility Breakout Forex System

Here are some tips for trading this or any other system:
Gain confidence by first trading a system on paper.
Make sure you can successfully trade a system mechanically before attempting to add any discretion.
Track your actual performance against the mechanical system at the end of each day, rating your success by whether you can match the […]

Here are some tips for trading this or any other system: Gain confidence by first trading a system on paper. Make sure you can successfully trade a system mechanically before attempting to add any discretion. Track your actual performance against the mechanical system at the end of each day, rating your success by whether you can match the system's performance. Monitor performance over an adequate sample, perhaps 100 trades or a set number of weeks. Do not let a down week or trade deter you. Read More

Volatility Breakout Forex System - Part 5

Categories: Volatility Breakout Forex System

Once again, an example of an initial condition might be: Enter a trade only on a day following the narrowest range of the last 7 days. Or, take a trade only if the market has made a new 20-day high or low within the last five trading days. Whenever you add a filter to a […]

Once again, an example of an initial condition might be: Enter a trade only on a day following the narrowest range of the last 7 days. Or, take a trade only if the market has made a new 20-day high or low within the last five trading days. Whenever you add a filter to a system, be sure to compare the results to a baseline and examine the difference in activity level. EXIT STRATEGIES: Time based (2nd day's close, 1st day's opening) First profitable opening ... Read More

Volatility Breakout Forex System - Part 4

Categories: Volatility Breakout Forex System

Enhancing a Basic Volatility Breakout System:
Adding filters can sometimes create further enhancements. Examples of types of filters include: indicators to determine whether or not a market is in a trending condition, seasonality, days of the week, or degree of volatility contraction already present in the market. Periods of low volatility in the market can be […]

Enhancing a Basic Volatility Breakout System: Adding filters can sometimes create further enhancements. Examples of types of filters include: indicators to determine whether or not a market is in a trending condition, seasonality, days of the week, or degree of volatility contraction already present in the market. Periods of low volatility in the market can be defined by a contraction in true range, a low ADX, or a statistical indicator such as a low historical volatility ratio or a low standard deviation. A system ... Read More

Volatility Breakout Forex System - Part 3

Categories: Volatility Breakout Forex System

Pros and Cons of Trading a Breakout System:
Like most systems, volatility breakout systems will clean up in volatile or runaway markets but tend to thrash when conditions get choppy or volume dries up. I believe they are still among the most profitable type of system to trade, and I also feel they will continue to […]

Pros and Cons of Trading a Breakout System: Like most systems, volatility breakout systems will clean up in volatile or runaway markets but tend to thrash when conditions get choppy or volume dries up. I believe they are still among the most profitable type of system to trade, and I also feel they will continue to be profitable in the long run. They are "durable" and "robust", though they tend to deteriorate when too large of an order is placed (i.e., greater than ... Read More

Volatility Breakout Forex System - Part 2

Categories: Volatility Breakout Forex System

Training Benefits for the Novice Trader
Derived from Trading a Volatility Breakout System:
Trading a short-term breakout system can be one of the best exercises to improve your trading.
· First, it teaches you to do things that are hard to do - buying high or selling low in a fast moving market! For most people, this feels […]

Training Benefits for the Novice Trader Derived from Trading a Volatility Breakout System: Trading a short-term breakout system can be one of the best exercises to improve your trading. · First, it teaches you to do things that are hard to do - buying high or selling low in a fast moving market! For most people, this feels quite unnatural! · Second, it always provides a defined money management stop once a trade is entered. Not adhering to a defined money management stop is the most ... Read More

Volatility Breakout Forex System - Part 1

Categories: Volatility Breakout Forex System

Breakout systems can actually be considered another form of swing trading, (which is a style of short term trading designed to capture the next immediate move). In other words, the trader is not concerned with any long term forecast or analysis, only the immediate price action.
Volatility breakout systems are based on the premise that if […]

Breakout systems can actually be considered another form of swing trading, (which is a style of short term trading designed to capture the next immediate move). In other words, the trader is not concerned with any long term forecast or analysis, only the immediate price action. Volatility breakout systems are based on the premise that if the market moves a certain percentage from a previous price level, the odds favor some continuation of the move. This continuation might only last one day, or ... Read More