SwingMan Breakout Forex Day Trading Strategy

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SwingMan Breakout Forex Day Trading Strategy

Some traders earn money by consistently making small profits with a relatively high probability. Some traders take a different approach. They prefer high yielding trades that would turn their fortunes around. Both approaches work very well. In fact, many profitable traders would say they have win rates below 50%, yet they are still profitable. That is because of the high yielding winning trades that they have.

Although it may seem counter-intuitive, day trading may probably be a very good opportunity to find high yielding trades. This is because trading on the lower timeframes allow traders to risk lesser than they would if they were trading on the higher timeframes. Tighter stop losses allow for smaller risks. At the same time, day trading could also allow traders to enter a fresh trend right at the beginning and exit at the end. This allows for higher yields which traders might miss if they were not paying close attention to the lower timeframes.

Breakouts are also prime conditions to find those high yielding trades. This is because breakouts could often be a catalyst for a strong trend. Trading during breakouts give traders the opportunity to capture huge trends that should result in huge profits.

Breakout Zones

Breakout Zones is a simple technical indicator which helps traders identify possible breakout zones in a day trading scenario.

Breakout Zones identifies support and resistance zones based on the price range created during the early hours of a trading day. This indicator marks the highs and lows of price action within the first few hours of a trading day. It then adjusts by a few pips to identify the level which price should breakthrough strongly from to confirm a possible breakout. The support and resistance lines formed are then extended up to just a few hours before the next trading day.

Traders can use this indicator either for breakout day trading strategies or range trading strategies. If price breaks out with strong momentum outside of the range, price may start a new trend which traders can trade. On the other hand, if price tends to bounce off from the support or resistance lines, it can also be hypothesized that price may either reverse or become range bound. Traders can then trade the bounce accordingly.

SwingMan UltraSuper TRIX

SwingMan UltraSuper TRIX is a custom technical indicator which is a modified oscillator.

This indicator plots histogram bars which oscillate freely around the midline zero. Positive bars indicate a bullish trend bias, while negative bars indicate a bearish trend bias.

The characteristics of this oscillator is that it plots smooth lines. This allows it to create clear trade signals with less false reversal signals.

This indicator plots histogram bars that change color to indicate the strengthening and weakening of a trend bias. Green bars indicate a strengthening bullish trend, while yellow green bars indicate a weakening bullish trend. Maroon bars indicate a strengthening bearish trend, while tomato bars indicate a weakening bearish trend.

This indicator also plots arrows to indicate or confirm reversals. This is based on the crossing over of the histogram bars from positive to negative or vice versa.

Trading Strategy

SwingMan Breakout Forex Day Trading Strategy trades on breakouts coming from the swing highs and swing lows of price action formed during the early hours of a trading day.

The Breakout Zones indicator is used to mechanically plot the needed breakout levels. Price action is then observed as price nears these levels.

Breakout trade setups are confirmed based on price action breaking out of the said range, while being confirmed by the SwingMan UltraSuper TRIX trend reversal.

On the SwingMan UltraSuper TRIX, trend reversal signals are simply based on the arrows plotted and the shifting of the histogram bars from positive to negative or vice versa.

Indicators:

  • Breakout-zones
  • SwingMan-UltraSuperTRIX_PV_4col
    • TRIX Period: 12

Preferred Time Frames: 5-minute chart only

Currency Pairs: FX majors, minors and crosses with high volatility

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • Price action should break above the daily resistance level plotted by the Breakout Zones indicator.
  • The SwingMan UltraSuper TRIX indicator should plot an arrow pointing up along with the histogram bars crossing above zero.
  • Enter a buy order on the confluence of the conditions above.

Stop Loss

  • Set the stop loss on a support below the entry candle.

Exit

  • Close the trade as soon as the SwingMan UltraSuper TRIX indicator plots an arrow pointing down.

SwingMan Breakout Forex Day Trading Strategy

SwingMan Breakout Forex Day Trading Strategy 2

Sell Trade Setup

Entry

  • Price action should break below the daily support level plotted by the Breakout Zones indicator.
  • The SwingMan UltraSuper TRIX indicator should plot an arrow pointing down along with the histogram bars crossing below zero.
  • Enter a seell order on the confluence of the conditions above.

Stop Loss

  • Set the stop loss on a resistance above the entry candle.

Exit

  • Close the trade as soon as the SwingMan UltraSuper TRIX indicator plots an arrow pointing up.

SwingMan Breakout Forex Day Trading Strategy 3

SwingMan Breakout Forex Day Trading Strategy 4

Conclusion

This simple trading strategy is one which could work well if you are willing and patient enough to wait for the right trade. This is because instead of going for the steady and accurate approach, this strategy aims to swing for the fences. If done right, traders my catch the right trade that could propel their accounts to another level.

This strategy is best used if set at high volatility start of day sessions. This would usually be the London session. Smart traders would also make use of price action confirmations as an additional confluence to the given signals.

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