FX Breakout

CODINGTRADER . COM

FX Breakout Radar Manua

Version 1.00

Manual

Table of Contents

FX Breakout Radar ..................................................................................... 2

What is FX Breakout Radar? ...................................................................... 3

Installation .................................................................................................. 4

Configurations ........................................................................................... 11

How to use FX Breakout Radar ................................................................ 16

How FX Breakout Radar determines breakout? ........................................ 25

Disclaimer / Disclosure ............................................................................. 27

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FX Breakout Radar

A Breakout happens when price moves out of an established trading range or technical patterns. In other words, price has broken out.

Breakouts occur when a deadlock between the bulls and bears dissolve. There is a newly “agreed upon” trend direction in the market. Trading breakout is to enter into a trade during this early stage of the trend and to ride it for great profit.

Trading Breakouts is one of the oldest (and arguably most successful) trading strategies around. In fact it forms the basis of most tactical entries employed by modern trading strategies. How many times have you heard of buying only on a confirmation? What is a better confirmation than price itself leading the way, and telling you to follow it? – Breakout!

Based on a simple yet successful channel breakout system, FX Breakout Radar is intended to help you identify breakouts, alerting you whenever trading opportunities arises.

No longer will you need to scan through all the charts (20+ pairs / multiple timeframes) searching for trading opportunities. FX Breakout Radar helps you identify all potential breakout trades just by glancing at its dashboard interface.

For our desktop version, you can set the program to alert you whenever new trading opportunities arise via a 1) Pop-up Window or 2) Email. You don’t even have watch the market!

For novice traders, we suggest using FX Breakout Radar while concurrently analyzing your own charts. Whenever you receive a new signal from the program, refer to the corresponding chart and observe how the price is behaving. You might find it uncomfortable to follow the signals initially as it is counter intuitive to buy at a higher price and sell at a lower price. However you will soon realize the number of the lost opportunities to hop onto a trend at its early breakout stage when you hesitate to enter on a signal.

FX Breakout Radar is intended to give you confidence in taking breakout trades and unknowingly makes you better trader psychologically.

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What is FX Breakout Radar?

FX Breakout Radar is an institutional quality yet user friendly FX signal application which helps you identify price breakouts, alerting you on breakout trading opportunities for 25 currency pairs over 6 timeframes.

Time-tested Channel Breakout System – Based on a simple yet successful channel breakout system, the method employed has been tested and traded profitably by professionals for decades. Nothing fanciful, just pure breakout trading.

User-Friendly Interface – Utilizing an easy-to-read dashboard style interface, the application provides you with a one glance overview of the currency market and all breakout trading opportunities, cutting short the analysis process for you.

Instant Email/Pop-up Alert – For our desktop version, you can set the program to alert you whenever new trading opportunities arise via a 1) Email or 2) Pop-up Window. You don’t even have to watch the market!

Psychology Trainer – Most traders find it uncomfortable to take breakout trades where you are required to buy high and sell low. It is acting against common human intuition. FX Breakout Radar is intended to give you confidence in taking breakout trades and unknowingly makes you better trader psychologically.

Unlike other products in our FX Radar Series, FX Breakout Radar does not depend on complex algorithms or proprietary trading systems. It is based on a simple yet obscenely profitable channel breakout strategy employed by some of the most successful traders of our time.

At CodingTrader, we had tried numerous ways to improve on this simple channel breakout strategy but ultimately decided on using the most basic form of it. Why? Because it best formularizes the core concept of breakout trading and modifying the strategy would have strayed it from what make it so successful in the first place.

To learn more about FX Breakout Radar/ other FX Radar series applications, please visit www.codingtrader.com . For technical support / enquiries, email our technical support team at support@codingtrader.com

In short, FX Breakout Radar is the ideal tool for retail traders who do not have the time to actively analyze the market.

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Installation

Download the exe installer (FX_Breakout_Radar.exe) from the website.

Double-click the file to start the installation process.

FIGURE 1 FX Breakout Radar Installer opened

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Click Next to display the Disclaimer.

FIGURE 2 FX Breakout Radar Disclaimer

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Click Next to display the License Agreement:

You must accept the License Agreement and click Next to continue.

FIGURE 3 FX Breakout Radar License Agreement

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Select the MetaTrader 4 installation that FX Breakout Radar should be installed into and click Next.

FIGURE 4 Choose MT4 Directory

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Confirm that the installation options are correct and click Start.

FIGURE 5 Confirm installation option

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Confirm that the installation options are correct and click Next.

FIGURE 6 Installation completed

The FX Breakout Radar program is automatically installed into your c:\program files\mt4 installation\ where ‘mt4 installation’ is your MetaTrader 4 broker installation folder.

That’s it. You have successfully installed FX Breakout Radar!

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After applying the template file FX_breakout_radar, your MetaTrader 4 window should look like this.

FIGURE 7 Chart after applying FX_breakout_radar template

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Configurations

If you do not wish to view all the pairs / timeframes provided in FX Breaout Radar, you have the option to turn them off.

Right-click on the chart and select Indicators List.

FIGURE 8 Chart Indicator List

Double click on FX_Breakout_Radar to open its configurations page.

FIGURE 9 FX Breakout Radar Configurations

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Select false for the Pairs that you do not wish to view. Similarly for timeframes which you do not wish to view, select false to hide it.

There are 2 modes of the checking for signals in FX Breakout Radar. One of it is to check for signals only on the start of a new bar. The other is to check for signals periodically. Checking for signals only on a new bar is usually preferred by traders who want a stronger confirmation of the signals. There will not be signals intra bar and spikes within a bar which fizzle off are filtered out. For computers which are slower, it is recommended to set this setting to true as it is less CPU intensive.

To check for signals only on the start of a new Bar, set checkOnNewBar to true. (It is set to false on default, meaning that signals will be checked periodically for all timeframes)

FIGURE 10 FX Breakout Radar Configurations – checkOnNewBar

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If checkOnNewBar is set to false, the program will refresh based on the refreshPeriod set. You can set the refresh rate of FX Breakout Radar too. Its default value is set to 5 min. If you are not monitoring at that timeframe, you may set it to a higher value. (Value is in minute)

FIGURE 11 FX Breakout Radar Configurations – refreshPeriod

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To have Email or Pop-up Window alert, set alertSignalChange to true and set toAlertScreen (for Pop-up window) or toAlertEmail (Email) to true. The default values are false.

FIGURE 12 FX Breakout Radar Configurations – Alerts

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For Email alert to work, you will need to configure your MetaTrader 4 email options. From the MetaTrader 4 menu bar, go to Tools->Options and select the Email tab.

FIGURE 13 Email Option settings

Set SMTP server as your internet service provider’s SMTP server. (This can usually be found on your internet service provider’s website) Enter the login ID and password for your email account with that internet service provider. You may want to send the signals alert to another email. This is specified in the To field

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How to use FX Breakout Radar

Trading Breakouts is one of the oldest (and arguably most successful) trading strategies around. In fact it forms the basis of most tactical entries employed by modern trading strategies.

What are Breakouts and how should we trade them?

Breakout happens when price moves outside an established trading range/ technical patterns. This means a break of support/resistance levels. As there isn’t any “obstruction” after the break of the support/resistance levels, price usually follows through strongly, giving traders who entered at the initial breakout a handsome profit. In many cases, the breakout also signals the beginning/continuation of a trend move.

FIGURE 14 Breakout examples

Now that you understand whatinterface and what they meant.

FIGURE

The Timeframes are listed at the top horizontal row

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Now that you understand what a breakout is, let us go through the components in

FIGURE 15 FX Breakout Radar Dashboard interface

ted at the top horizontal row and the Pairs are listed in the left vertical column.

et us go through the components in the dashboard

and the Pairs are listed in the left vertical column.

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The symbols and boxes in the dashboard means:

- Buy (Initial Break Up)

- Sell (Initial Break Down)

- Continued Break Up

- Continued Break Down

- No Signal

- Buy (Initial Break Up)

Price has just broken the top resistance channel line. Buy now!

- Sell (Initial Break down)

Price has just broken the bottom support channel line. Sell now!

- Continued Break up

Price has already broken up previously and is currently still breaking up (Creating new local high price). Risk of price retracing is high. However upward momentum of price is strong. Set a tighter stop if you are buying now or wait for a retracement entry.

If you are already in a long trade, stay with it.

- Continued Break down

Price has already broken down previously and is currently still breaking down (Creating new local low price). Risk of price retracing is high. However downward momentum of price is strong. Set a tighter stop if you are selling now or wait for a retracement entry.

If you are already in a short trade, stay with it.

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- No Signal

Price is not making new high/low. Do nothing.

The rules for using FX Breakout Radar are simple.

Buy when you see the breakup BUY signal and sell when you see the breakdown SELL signal. (For advance traders, who wants to wait for a retracement before entering on the signal, it is possible but you might end up missing trades altogether. Back-testing had been done and it is advised to take the signal once it appears)

When price has broken out recently and is currently still making new high/low, the CONTINUED BREAKUP/DOWN signals are shown. This is to help you monitor the momentum of the breakouts after entering on the initial BUY/SELL signals. If price continues to break up/down, the momentum is strong and you should stay with the trade. If it changes from BUY/CONTINUED BREAKUP to NO SIGNAL or from SELL/CONTINUED BREAKDOWN to NO SIGNAL, price momentum is waning. A retracement is taking place and it could also signify a false breakout.

Signals appearing in multiple timeframes

If there is a breakout in the lower timeframe chart for the pair you are trading, it is signaling a potential breakout in the current timeframe.

If there is a breakout in the current timeframe chart for the pair you are trading and there is also a breakout in the higher timeframe chart, the breakout is strong as a higher level support/resistance level is being taken out. This is a high probability trade!

Confirmation on Bar Close

There are different interpretations on what constitute a breakout. Should a spike up within the current bar be considered a breakup or should price close above/below the breakout level for the current bar for it to be considered a breakout?

To wait for price to close above/below the breakout level is a firmer confirmation of price breaking out. However there is risk of price running too far away from the breakout level if you wait to enter on the next bar.

We leave this option to you and you can set which type of signal you want to receive in FX Breakout Radar.

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Where to set Stop Losses?

There are many methods for setting stop losses. In fact, not setting a stop loss level should also be taken into consideration! Back-testing has been done and the result is best for the case where there is no stop loss. However the drawdown for not setting stop losses might be too great for most traders to handle.

Here are a few methods for setting the stops which we have tested successfully.

1. Swing Points

A break of the previous swing point likely means that the breakout is a failed attempt.

FIGURE 16A Setting Stop Loss (Swing Point)

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2. Opposite ends of Donchian Channel

A Donchian Channel marks the highest high/lowest low of the previous X periods. It changes with time so your stop loss will move as well. Notice that the stop loss level for the Donchian Channel is similar to the Swing Point’s stop loss level.

FIGURE 16B Setting Stop Loss (Donchian)

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3. Moving Average Crossover

A fast moving average crossing over a slow moving average signifies a change in the current direction of price movement. This has been used many professionals as a signal for exiting their trade. Notice that for this method, you do not know where your stop loss level is until the moving averages crosses.

FIGURE 16C Setting Stop Loss (Moving Averages Crossover)

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Email Alert

In addition to watching the dashboard, FX Breakout Radar provides Email alert for the desktop version. The program will email you immediately when there are new signals. You will only need to monitor your mailbox to trade!

FIGURE 17 Email Alert

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Pop-up Window Alert

The pop-up window alert is similar to the Email alert. On new signals, the program will display a pop-up window on your screen. You can be working on other things and be alerted immediately when new signals arise.

FIGURE 18 Pop-up window Alert

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How FX Breakout Radar determines breakout?

Unlike other products in our FX Radar Series, where we keep the algorithm for deriving the signals proprietary, we will reveal entirely how the signals for FX Breakout Radar are generated. In fact, it is already an open secret in the industry!

FX Breakout Radar does not depend on complex algorithms. It is based on a simple Donchian channel breakout strategy employed by some of the most successful traders of our time. The only addition we included in is a filter for the Continued Breakout signals where continued breakout is not considered as an entry signal to you.

FIGURE 19 Donchian Channel Breakout

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From the figure above, we can see the Donchian Channel (Red and Blue lines) enclosing the price.

When the channel line is broken initially, there is a SELL signal. Subsequently the channel line is breached again (highlighted by the 2 pink boxes). However in this case, there is no SELL signal. Why? This is because these are continued breakouts within X periods from the initial breakout. You do not consider these breakouts although technically they are.

That’s it. That’s all there is to this breakout strategy! A simple yet hugely profitable strategy if you can manage your money well.

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Disclaimer / Disclosure

Forex trading on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade forex, you should carefully consider your investment objectives, level of experience, and risk appetite. You must be aware of the risks of investing in forex and be willing to accept them in order to trade in these markets. Trading involves substantial risk of loss and is not suitable for all investors.

CodingTrader.com has taken measures to ensure the accuracy and timeliness of the information in the application, however, does not guarantee its accuracy and timeliness, and will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information, inability to access the information, for any delay in or failure of the transmission or the receipt of any instruction or notifications sent through this application.

This application is neither a solicitation nor an offer to buy or sell currencies. Please remember that the past performance of any trading system or methodology is not necessarily indicative of future results.