1. The 50-Day Breakout Forex Trading Strategy It has been well established by academic research that the price movement of liquid financial instruments shows a momentum effect. This means that when prices are moving strongly in one direction, it is more likely that this directional movement will continue over the short term than reverse. Also, it is likely that any further movement in the direction of the trend will be stronger than any movement against the trend. We should make sure to only apply this rule to the most liquid Forex currency pairs, as if we check historical performance over the past twenty years or so, we can see that the currency pairs whose breakouts were the most profitable in this way were the EUR/USD and USD/JPY currency pairs. So only these two currency pairs should be traded when using this trading strategy. This might sound overly restrictive, but trading these two pairs will give you exposure to the three major global currencies and almost a majority of global Forex volume - 41% of all the foreign exchange transactions conducted globally are within these two currency pairs, while the USD is a party to approximately 80% of global transactions by volume. What is this strategy based upon? Looking back over historical data from the summer of 2001 until March 2020, we can see that when the EUR/USD or USD/JPY currency pairs have closed at new 50-day highs or lows, the following volatility-adjusted statistics were observed one day and eight days later: Strategy Rules: Only trade EUR/USD and USD/JPY currency pairs. Monitor the daily chart for an entry signal, which is a new 50-day high or new 50-day low closing price. Just count 50 candlesticks to the left if you think you see a new high or low closing price. The horizontal line chart tool can be used to check this in almost all charting packages. The closing price should be higher or lower than all the previous 50 closing prices, not from the highest or lowest prices achieved by the wicks of previous candlesticks. Entry signal: a new 50-day high closing price is a signal to enter a long trade. A new 50-day low closing price is a signal to enter a short trade. Trade entry: if you are trading only on the daily time frame (which is recommended), a trade should be entered right away after the entry signal is generated. Risk / Position size / Leverage: you should only risk 0.25% of your account equity per trade at most. If you apply this position sizing strategy, it means that if you have $2,000 in your account, you should risk $5 on the trade. Divide this amount by the stop loss you are going to use: in the example below it is 50 pips, so there you would know to size the trade so you are risking 10 cents per pip (in EUR/USD, that would be 0.01 lots or 1 micro-lot). Stop loss: this should be based on the value of the ATR indicator set to 15 days. Tighter stop losses tend to ensure greater overall profitability although they also lower the win percentage. I recommend as the best balance between the two a stop loss set to half of the value of the ATR indicator. For example, if you see a new 50-day high daily close in EUR/USD at 1.1500, and the ATR indicator set to show the average range of the past 15 days shows this as 100 pips, you would use a 50 pip stop loss. Trade management: after 2 days from the trade entry, if the trade is still open, move the stop loss to break even. If the market price is worse than the stop loss, close the trade at the market price. This is an application of the old trading maxim “cut losers short and let winners run”. Trade frequency: you can have more than one trade in the same direction in the same currency pair at the same time, but as you will be moving stop losses to break even after 2 days, you will not have more than two trades at risk at the same time in the same currency pair. Exit strategy: you can choose between simply using a time-based exit, which should be between 5 and 8 days (the upper limit has historically given the most profitable performance) after entering the trade, or some kind of a trailing stop once the price has reached a floating profit at least double the risk. For example, if your stop loss were set at 50 pips, you would begin applying the trailing stop once the trade has reached a profit of 100 pips. These are the complete rules for my 50-day breakout Forex trading strategy. Beginner traders can trade this knowing that this strategy has performed well in recent years, but should be aware that most trades are not winning trades – you can however expect to win more on the winning trades than you lose on the losing trades. I have allowed some flexibility on the rules for an exit strategy as this is an area where beginners need to do a lot of learning. Most traders find exits challenging, as they can also be psychologically difficult. Beginners will probably find it useful to start by following a strict time-based exit strategy, but at the end of each day make a note of whether they wanted to exit the trade or not. Then the beginner trader can compare whether their mental “discretionary” exit strategy outperformed the time-based exit strategy after a series of trades, maybe at least twenty trades would give a fair sample. Many traders will be surprised to find that they will get better results just exiting after the same number of days each time than by trusting their faith in price action indicating that it is time to get out of the trade. Judging the price movement yourself to trigger your own trade exit signal is very challenging for most people, so this is a good method you can use to practice mentally without harming your trading account. I mentioned that it is possible to trade this strategy in a shorter time frame than the daily chart. I recommend that beginners start with the daily chart and stick to it, but more experienced traders can drop down to the 4-hour or even hourly chart once the daily chart has given a trade entry signal to try to find a more precise entry. Most traders will find this does not improve their overall performance with this strategy.
An up inclined 10 day average that's above a 15 day average is enough of a trend, for buying the dips.
It looks like it is! https://finance.yahoo.com/quote/JPY=X/history?p=JPY=X Nice. Not sure if I have the skills to test what you are suggesting niko, need to take a look.
Any system posted should be well tested over several years so trader can better understand how large are drawdown. Never trust other people with your money, test, test, test.