3 Breakout Box Forex Trading System

3 Box Forex Breakout Strategy For MT4

Table Of Contents:

  1. 3 Box Forex Breakout Strategy For MT4
  2. Essential factors you should know
  3. Functions of the essential factors

    1. 3 breakout boxes indicator
    2. The bullish and bearish breakout
    3. Delayed trade execution
    4. High impact news
  4. The long trade setup sequence

    1. Stop loss
    2. Take profit
  5. The short trade setup sequence

    1. Stop loss
    2. Take profit
  6. 3 Box Forex Breakout Strategy For MT4 – Useful advice
  7. 3 Box Forex Breakout Strategy For MT4 – Conclusion

Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.

The
3 Box Forex Breakout Strategy For MT4
is based on an indicator that draws boxes on the chart. The boxes highlight the price range of the price action which formed between 3 GMT and 9 GMT. These boxes are used as breakout zones during the European session so, we should be expecting to take trades during the London trading sessions while using this strategy.

While using the 3 Box Forex Breakout Strategy For MT4, you might get confused by seeing the complex chart setup process. But if you divide the steps and sequentially analyze the market data, you should be able to find the breakout entry points without much hassle. Now, let’s check the essential elements which we will be using in the 3 Box Forex Breakout Strategy For MT4.

Essential factors you should know

  1. 3 breakout boxes indicator
  2. The bullish and bearish breakout
  3. Active trading hours
  4. High impact news



Chart setup with the 3 Box Forex Breakout Strategy For MT4

By seeing the above chart, it very normal to get confused during the data analysis process. But if you learn about the functions of the essential elements used in the 3 Box Forex Breakout Strategy For MT4, you should be able to find reliable breakout patterns.

3 breakout boxes indicator

After installing the 3 breakout boxes indicator, you should be able to spot some highlighted boxes in the main chart. Each box is formed adjacent to horizontal colored bars. The upper portion of the bar has a blue color and the lower portion of the bar has a red color.

Identifying the potential trading box

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At the bottom of the main chart, you should see a selling and buying zone. Though the 3 breakout boxes indicator will give you an exact entry and exit point, still you should not rely on that levels. Instead, consider those numbers as a reference point so that you can become more concerned when the price reaches a certain price level.

The bullish and bearish breakout

The breakout of the boxes is identified with the help of the bullish and bearish candle. Without having a clear concept regarding the candlestick pattern formation, you might end up taking the trades during the false breakout. However, you can reduce the formation of false signals significantly by analyzing the data in the H1 or higher time frames only.

Identifying the breakout pattern in the box

Identifying a valid breakout is not that tough once you relate the opening and closing price of the candle. If you spot a candle opening inside the box but eventually the closing price is above the box, you may consider it as a valid bullish breakout. On the contrary, if the closing price is below the box, it should be considered as a valid bearish breakout.

Delayed trade execution

Some of the retail traders often take trades by ignoring the breakout boxes. They often take the trades after the momentum of the market is faded away. While using the 3 Box Forex Breakout Strategy For MT4, you should be executing the trades right after the breakout takes place.

So, you must remain active during the London trading session. If you miss the trading opportunity during that particular trading session, the breakout is no longer valid to open a new trade. You need to wait till the price enters inside a box and then you should be looking for a fresh breakout.

High impact news

The breakout of the boxes is easy to identify once you pay close attention to the trading hours. However, the overall trading process becomes a bit harder during the major news release. The market often prints a bullish candle or bearish candle which confirms the breakout. But as soon as the rumors are washed away with real news data, the market tends to reverse.

So, to protect yourself from such a false breakout signal, it is better to avoid the high-impact news. However, those who have strong fundamental analysis skills may take the trades after analyzing the major news data.

The long trade setup sequence

The professional traders usually recommend the rookies to look for the trade signals in a higher time frame. In a higher time frame, the formation of the trend and box patterns are much matured and thus you may expect quality trade signals. Now let’s check the sequential steps to execute the long trade.

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Conditions to execute the long trade

  1. Select a major currency pair and analyze the trend in the H1 or higher time frame so that you don’t have to deal with the false break.
  2. Look at the bottom of the chart and check the key metrics in the buy zone segment. The price should be trading near the buy zone.
  3. Wait for the price to break above the boxed formation. Usually, the breakout should take place during medium or high-impact news.
  4. As the breakout takes place, you should notice a green horizontal line stating the buying place. You may consider that level as the potential zone to take the long trade.
  5. Have a look at the formation of the Japanese candlestick pattern and make sure the candle has a closing above the box.
  6. After checking all these conditions, you do have the options to open the long trade. But be careful about the risk factor.



Execution of the long trade

Stop loss

You should be setting the stop loss below the low of the bullish candle. In case you intend to trade most conservatively, you may set the SL below the low of the box.

Take profit

The indicator used in the 3 Box Forex Breakout Strategy For MT4 should draw the profit target. Since the profit target levels are drawn in three stages, you can analyze the resistance level manually and use one of the profit target zones to execute the trade.

The short trade setup sequence

Taking the short trade with the help of the 3 Box Forex Breakout Strategy For MT4 is very similar to the long trade execution. But in this segment, we will discuss the key technique in a bit different way so that you can withstand different conditions of the market.

Conditions to execute the short trade

  1. Pick an asset that is already in the downtrend. Analyze the trend by using the higher lows formed in the H1 or higher time frame.
  2. Wait till the price enters into a box zone. As the price gets stuck in the boxed zone, you should be getting ready to take the short trade.
  3. After the sellers gain enough momentum, the price should break below the support level of the box.
  4. As the support level gets breached, you should be looking at the formation of the Japanese candle. The closing price of the Japanese candle must be below the support level.
  5. Check the economic calendar and if you see data release on major news, you should relate it with the technical factors of the market.
  6. Once you have assessed all this important information, you should be able to take the short trades.



Execution of the short trade

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Stop loss

Since the box act as a major resistance zone, we should be placing our stop loss above the boxed zone. But if you intend to use a tight SL, you may place the SL with the help of the bearish price action confirmation signals.

Take profit

You don’t have to determine the take profit level with manual labor while using the 3 Box Forex Breakout Strategy For MT4. You may set the TP near the TP1, TP2, or the TP3 zone.

3 Box Forex Breakout Strategy For MT4 – Useful advice

While using the 3 Box Forex Breakout Strategy For MT4, you should be cautious about the high-impact news. The major news release can cause massive spikes in both directions. And try not to take the trades by analyzing the minute time frame as the box length is will be too small in terms of pips. Thus, you will be stopped out from most of the trades. You should look for the trade signals in the box that has a confined region over 40 pips at least.

3 Box Forex Breakout Strategy For MT4 – Conclusion

Trading is all about managing the risk profile and taking the trades with great caution. While using the 3 Box Forex Breakout Strategy For MT4, you may learn the essential steps mentioned in this article by using the demo account. Once you become comfortable with this system, you may start trading the market with real money.

Note that the strategy might be well balanced still you should be accepting few losses. Unless you have the mental strength to accept few losing trades, it will be a big challenge to survive in this market. So trade with low risk and don’t get frustrated with the negative outcomes.

Download the complete system description and the files here:

Partially Automated Trading Besides Your Day Job

Alerts In Real-Time When Divergences Occur

3 Breakout Box Forex Trading System

Source: https://www.perfecttrendsystem.com/blog_strategies_1/en/3-box-forex-breakout-strategy-for-mt4

Posted by: derivbinary.com