31# 4H Breakout Trading System
Submit by Janus Trader
For this system we will use four indicators.
• Exponential Moving Average 30 Period
• Exponential Moving Average 150 Period
• Exponential Moving Average 200 Period
• Exponential Moving Average 365 Period
EMA 30 – This is our current trend indicator. In a strong trend a currency pair
will have a tendency to retrace to the EMA 30 and then bounce off of it.
• EMA 150, EMA 200, EMA 365 – These EMA’s help us to find support and
resistance levels. Most of the time these are your strong support and resistance
levels, and if you look at them on a 4H chart you will see that more times than not
a currency pair will bounce when it hits one of these.
Using a breakout system to trade with greatly increases your probability of winning on a trade, and that is the reason why this type of system tends to work so well. There are a couple of reasons why breakouts work.
First, you are trading with the trend. You are always better trading with a long term
trend than you are against it. Simply by trading with a strong trend you are likely to win.
Even when we trade the trends though, where we enter the market determines our profit level. It won’t do to risk your whole account by using massive stops and hoping that a trend continues (which it quite possibly will). A better way to enter a trade is to find a point at which we can enter, risk less, and still profit.
A breakout point gives us that entry point. Based on prior market behavior we know thatwhen a breakout occurs, the currency pair is very likely to continue on with its trend.
This makes breakouts one of the best entry systems you will ever use.
With an idea of what we will be doing, and your charts setup, let’s move on to talk aboutentry signals.
Entry Signals and Stops
With this trading system we will be using two different styles of breakouts to identify our entry points. One is called a trend line breakout and the other is called double tops. Being able to identify both types of breakouts is important to trading with this system.(See example and pdf)
Breakout 4H Strategy
Midnight Easy breakout
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4H Forex Strategies