Trading strategy: 1-Minute Breaks

Description

The 1-Minute Breaks strategy is a high-tempo trading strategy which gives numerous signals. This is typical for a strategy in a 1-minute time frame. The signals are filtered using the Supertrend indicator and volatility. Nevertheless the trader must use a degree of discretion to judge which signals to use.

This trading strategy is also a very good starting point for traders who wish to develop their own 1-minute trading strategy. Several possibilities present themselves to develop this strategy further.

The strategy in detail

The 1-Minute Breaks strategy is suitable for all instruments and is traded on a 1-minute chart.

Should I trade? Traders should only trade if there is sufficient volatility. The 1-Minute Breaks strategy uses the average true range indicator (ATR) to inform you if there is sufficient volatility. If the volatility is too low, chart background is purple.

This example shows a chart background which is first purple (not enough volatility to trade) and later red (trading is possible).

Should I buy or should I short sell? Traders should only trade in the direction of the trend. The strategy uses the Supertrend indicator to determine the trend. The Supertrend is calculated in a 10-minute time frame. A unique functionality in NanoTrader allows this aggregated indicator to be used in the 1-minute main chart.

If the trend is positive (bullish), the chart background is green and only buy signals occur. If the trend is negative (bearish), the chart background is red and only short sell signals occur.

This example shows the Supertrend band in the main chart. The trend, measured on a 10-minute basis, is first positive, then negative and then positive again. The chart background is coloured accordingly.

Interesting: the Supertrend is shown as a band. This is interesting additional feature of the strategy. The height of the band varies when volatility increases or decreases. This is interesting information for the trader. It is better to accept a signal when volatility is going up.

When to open a position?

The 1-Minute Breaks strategy gives three signal types.

The first signal type is the initial signal. These signals occur when the market breaks out of the coloured three-line break bands. The initial signals are grey in the chart.

This example shows three initial buy signals. Initial buy signals occur when the market closes above the red bands.

This example shows two initial short sell signals. Initial short sell signals occur when the market closes below the green bands.

The second signal type is the continuation signal. Continuation signals occur when the market breaks out off the three-line break band in the direction of the trend. If they occur after an initial signal, the continuation signals can be considered confirmations. Some traders wait for the first confirmation signal after the initial signal to open their position.

The third signal type is the Supertrend band signal. The Supertrend band signals occur when the market closes in the Supertrend band. The Supertrend band signals are visualized by a green or red ellipse in the chart.

This example shows two Supertrend band buy signals.

When to close a position?

The 1-Minute Breaks strategy uses a target and a stop loss. If you activate the Tradeguard, these two orders will be placed automatically. Both the target and the stop are placed at a distance of 3 times the ATR. Live orders can be grabbed in the chart and dragged to other price levels.

This example shows a short sell initial signal which coincides, more or less, with a Supertrend band signal. The trader opens a short sell position. A second initial signal occurs later. The red line is the stop order. The green line is the target order. The market price is not far from the target.

This example is the same trade as in the example above. The target has been reached and the position was closed with a profit.

Settings

In the Designer dialog window or directly in the chart you can:

- choose if you want to receive an alarm (pop-up, sound, e-mail) when a signal occurs.
- choose when you want to receive signals. The default is "all day" 00.00 – 23.59.
- choose the number of continuation signals you wish to receive (0 or more).

Conclusion

The 1-Minute Breaks strategy is suitable for all instruments. The strategy gives numerous signals in the course of the day. Traders must use some discretion as to which signals they use. Signals occur only in the direction of the trend and only if the volatility is sufficiently high to trade.

This trading strategy is a good starting point for traders who wish to develop their personal 1-minute time frame trading strategy. Several possibilities present themselves to develop this strategy further.

Practical implementation

Using the NanoTrader Full follow these steps:

• Select the financial instrument you wish to trade and open the chart.
• Select the template study "WHS 1-Minute Breaks" in the "WHS Strategies" folder.
• Adapt the settings as described above.
• If you want to trade semi-automatically, activate TradeGuard+AutoOrder in the chart. If you want to trade automatically, activate AutoOrder in the chart.