EURJPY Breakout Strategy

Today I want to bring to your attention a simple, unusual and interesting trading strategy.

  • Its simplicity lies in the fact that it works on just one indicator.
  • The unusual thing is that you will not need to sit with her all day at the monitor screen. It is enough to enter the terminal just a couple of times in order to decide in which direction to open trading positions today and whether to open them at all today.
  • It can be called interesting for the two top points. However, we call “interesting” everything that we didn’t know before and in which we have aroused interest today.

Now we will analyze a breakout and effective trading strategy called ” EURJPY Breakout Strategy “. As you probably guessed from its name, it works with the EUR / JPY (euro / yen) currency pair . The algorithm of its work is based on a single author’s indicator called ” 3 Tier London Breakout V.3.2b “.

Naturally, you will not find it in the standard package of your terminal tools. You will need to download the indicator and template at the end of this article. After that, the instrument itself can be pulled onto the chart from the ” Template ” context menu , called by right-clicking on the background of the terminal working window.

Trading rules for TS "EURJPY Breakout Strategy"

Trading rules for TS “EURJPY Breakout Strategy”

The TS operation is based on an indicator that is used in trading according to another popular strategy – ” London Explosion “. With its help, on the chart, you can set some construction parameters, the so-called “Boxes”. What this “Box” represents in the strategy we are considering, you can see in fig. 1.

The trading principle for that strategy is very simple. Traders decide when and in what direction they can open a trade position based on signals when the price breaks the “Box” borders. As you can see, the trading signals of the EURJPY Breakout Strategy are very simple. They do not require the trader to have any deep knowledge of the theory of stock trading. Using simple examples, we will analyze in more detail all the nuances associated with opening positions in one direction or another.

It should be said that the formation of a new “Box” occurs every day after 00:00 Moscow time. It is at this time that a new trading period begins, which lasts until 04:00 (also Moscow time). After midnight, the “Box” begins to form its range – this is the distance (in points) between its upper and lower borders. For trading this strategy, such a parameter as the size of this range is very important.

So let’s take a look at the entire trading algorithm in order within the framework of the strategy we are considering:

  1. TF – M15.
  2. Currency instrument – EUR / JPY .
  3. The “box” is formed with a range of less than 45 and more than 15 points, which, according to the terms of the EURJPY Breakout Strategy , allows us to look for options for entering the market.
  4. We watch the price and wait for the first candlestick breakout of one of the borders of our “Box”:
  • The breakout candlestick closed at the upper border – we enter with a buy.
  • The candlestick broke through the lower border and closed – we are looking for an entry with a sell.

I consider it necessary to draw your attention to the fact that our working range is limited by the size of the “Box” itself, measured in points. It is equal to a number in the range of 15 (minimum) to 45 (maximum) points. We work within this range of values. If a “Box” is formed by the “4-digit”:

  • more than 45 points – you should not trade.
  • less than 15 points, we also do not trade.

Login with purchase

So, we have formed a new “Box” with a range of 29 points, allowing us to trade. Observing the price, we see how its first candlestick closes at the level of the upper border of our “Box”, and the next candlestick breaks it – at this point we enter the market by opening a buy position:

  • We set Take Profit at the first target level in the direction of the trade we opened.
  • Stop Loss under the terms of the TS is set for the opposite level of the box.

The Stop Loss to Take Profit ratio is 1: 1.

As seen in Fig. 3, the price is confidently moving towards the open position, which is closed by Take Profit. Frankly, I would have continued to hold this position after the transaction was moved to breakeven. I think that many traders would do this in order to make big profits.