Trading strategy “Breakdown of the range”

Trading strategy

The essence of the forex Trading strategy Breakdown of the range is reduced to tracking of the flat situations in the market, narrow ranges of price fluctuations and placement of pending orders in both directions for breakdown (Buy Stop and Sell Stop).

Stop-loss must be placed on the opposite side of this consolidation channel for each order. The best indicator for determining the market suitable for us and the location of pending orders are the Bollinger Bands. If the consolidation channel defined on the chart has, at least the slightest inclination, the Bollinger bands diverge, if the market calms down – they converge. In our case, for the conclusion of the transaction there will be a situation when the strips are parallel.

Trading strategy Breakdown

The conditions are fulfilled: the Bollinger lines are practically parallel; After the appearance of a fractal down, a long white candle formed, which crossed the upper level of the channel and was fixed. The Buy stop worked, the price went 115 points, with a rollback of 16 points (where confirmation, there is a new signal of a fractal down).

Trading strategy Breakdown

This example confirms the fractal signal, after which the price has passed 50 points.

Although it is not always possible to determine the ideal parallel horizontal channels, but if you scroll the price chart with this history indicator, you can easily recognize all the sites suitable for entering the market. Also, do not forget that in the market, quiet plots are rare, and in flat the price does not stand still, but does false breakdowns.

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Since, after the lateral movement, a trend appears (important news, etc.), the price goes through 50 – 80 points, therefore, when placing pending orders, it is worth deviating from the Bollinger lines by 5-10 points.

Trading strategy Breakdown

False breakdown of the upper line of the Bollinger channel. But even if one stop-loss order was closed, then the second, to break through, returned you in double size. And then there is the opportunity to trade inside the channel: the price made a rebound after the appearance of the fractal, the trailing stop worked, after, the fractal appeared when the price did not reach the channel’s middle line, and went down, as indicated by the fractal. We took another 100 points. Next, you need to wait for a suitable signal to enter.

Trading strategy Breakdown – Take-profit is better not to put, but to trail the position and, if possible, close the position in parts.

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