Simple Forex Breakout “Straddle” Strategy

Trading currencies online can be profitable regardless of whether the trader has no clue whatsoever if price will move up or down.

With appropriate price volatility, a feature that is seen in abundance during big fundamental data event risk, traders are able to setup a neutral strategy that makes profit when the market either goes up or down, this is the idea behind the “Simple Forex Breakout “Straddle” Strategy.”

Chart Setup

MetaTrader4 Indicators: r_Gator.ex4 (Input Variable modified; period=11, period_1=14, period_2=19), RainbowMMA_10.ex4 (default setting)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day

Recommended Trading Sessions: Any

Currency Pairs: Any pair

Download

Download the Simple Forex Breakout “Straddle” Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy order if the following indicator or chart pattern gets displayed:

  1. The strategy starts off by looking at price range at least 25 minutes before the event risk (the candles between the two vertical blue lines on Fig. 1.0). We then take note of the high and low of the range (the two horizontal black lines).
  2. Set a “Buy Stop” above the high of the range (the upper breakout point) @ 112.526 and at the same time a “Sell Stop” below the low of the range (the lower breakout point) @ 112.405. Wait for the news release.
  3. If the lines of the r_Gator.ex4 custom indicator intersect the lime colored lines of the RainbowMMA_10 indicator bottom up, with price trading somewhat above, a buy order is advised. Notice the indicator setup when the blue, green and red lines of the r_Gator.ex4 indicator stay somewhat below the lime lines of the RainbowMMA_10 indicator.

The “Buy Stop” was triggered (refer to Fig. 1.0) and our target was reached (trade successful).

Stop Loss for Buy Entry: Place stop loss 2 pips below immediate support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions are in place:

  1. If the lines of the r_Gator.ex4 custom indicator intersects the lime lines of the RainbowMMA_10 MT4 indicator top downward, in a manner that sees the red line or the r_Gator.ex4 coming out first during the intersection of the lime lines of the RainbowMMA_10 indicator, an exit or take profit is advised.

Sell Entry Rules

Initiate a buy order if the following holds sway:

  1. Checkout the price range at least 25 minutes before the event risk (the candles between the two vertical blue lines on Fig. 1.1). We then take note of the high and low of the range (mapped by the two horizontal black lines).
  2. Set a “Buy Stop” above the high of the range (the upper breakout point) @ 111.549 and at the same time a “Sell Stop” below the low of the range (the lower breakout point) @ 111.195. Wait for the news release.
  3. If the lines of the r_Gator.ex4 custom indicator intersect the lime colored lines of the RainbowMMA_10 indicator top downward, with price trading somewhat below, a sell order is advised. Notice the indicator setup when the blue, green and red lines of the r_Gator.ex4 indicator stay somewhat above the lime lines of the RainbowMMA_10 indicator (check Fig. 1.1).

Stop Loss for Sell Entry: Place stop loss 2 pips above immediate resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following holds true:

  1. If the lines of the r_Gator.ex4 custom indicator intersects the lime lines of the RainbowMMA_10 MT4 indicator bottom up, in a manner that sees the red line or the r_Gator.ex4 popping out first during the intersection of the lime lines of the RainbowMMA_10 indicator, an exit or take profit is advised.

Sell Trade Example

Fig. 1.1

Free Download

Download the Simple Forex Breakout “Straddle” Strategy

About The Trading Indicators

The r_Gator.ex4 is an indicator that takes after the Alligator MT4 indicator (since they show comparable values for the MA periods), but the r_gator.ex4 only produces its signal earlier than the Alligator.

The RainbowMMA_10.ex4 is the tenth GMMA forex indicator in a series of eleven indicators that are put together on the Guppy Multi Moving Average.

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