CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

The Traders' Magazine Breakout pack... 3 strategies in 1 pack

This FREE strategies pack contains three complete breakout strategies based on articles published in German in the popular Traders' Magazine. These trading strategies are included in the pack:

  1. The Donchian Channel Breakout (day trading)
  2. The Daily Range Breakout (day trading)
  3. The Narrow Range Breakout (swing trading)

Click here to activate the FREE Traders' Magazine Breakout strategies pack in your NanoTrader Full platform.

Click here for a FREE NanoTrader trading platform demo.

1. The Donchian Channel Breakout strategy

Description

The Donchian Channel Breakout strategy combines the popular Donchian channel with moving averages. This day trading strategy is suitable for most instruments. The strategy was developed in an article written by Andrey Bulezyuk published in German in the Traders' Magazine.

Click here to activate the FREE Traders' Magazine Breakout strategies pack in your NanoTrader Full platform.

Suitable for : Market indices (DAX, DOW, CAC...)
: Forex (EUR/USD...)
: Stocks
Instruments : Futures and CFD-Forex
Trading type : Day trading
Trading tempo : 2-3 signals per day
Using NanoTrader Full : Manual or (semi-)automated

The Donchian Channel Breakout strategy uses two Donchian channels to open and close positions. These channels are combined with a pair of crossing moving averages. When the zone between the moving averages is green, the market is considered bullish. When the zone between the moving averages is red, the market is considered bearish.

Easy, simple and usable for all instruments, the Donchian Channel Breakout strategy should appeal to day traders who like breakouts. The special trailing stop based on the Donchian channel adds to the strategy’s appeal.

This example shows the overlapping Donchian channels and the pair of crossing moving averages.

Donchian Channel Breakout.


When to open a position?

A long position is bought when the market breaks out of the widest Donchian channel. For a signal to be accepted, the moving average indicators must indicate that the market is bullish.

A short position is sold when the market breaks out of the widest Donchian channel. For a signal to be accepted, the moving average indicators must indicate that the market is bearish.

When to close a position?

The Donchian Channel Breakout strategy has a unique stop. This proprietary stop automatically follows the opposite outer edge of the narrowest Donchian channel.

This example shows a buy signal. The market breaks out of the widest Donchian channel. At the same time the crossing moving averages indicate a bullish market. Notice the unique stop which automatically follows the edge of the narrowest Donchian channel.

Donchian Channel trading strategy.

This example shows a short sell signal. The market breaks out of the widest Donchian channel. At the same time the crossing moving averages indicate a bearish market. Notice the unique stop which automatically follows the edge of the narrowest Donchian channel.

Traders Magazine Donchian Channel.

2. The Daily Breakout strategy

Description

The Daily Breakout strategy focuses on breakouts in the forex markets. The strategy has its own unique price range and trailing stop order. Day trading is usually what the strategy is used for, but swing trading is also possible. The Daily Breakout strategy was developed in an article written by Maite Krause published in Germany in the popular Traders' Magazine.

Click here to activate the FREE Traders' Magazine Breakout strategies pack in your NanoTrader Full platform.

Suitable for : The major forex (EUR/USD...)
Instruments : Forex
Trading type : Day trading
Trading tempo : Up to 4 signals per day
Using NanoTrader Full : Manual or (semi-)automated

Every day, the strategy draws a price range based on the market movements between 24:00 and 8:00 CET. The price range is usually calculated on the basis of 15-minute charts but traders can experiment with higher time frames. When the market breaks out of the strategy’s price range, a trade could be possible.

This example shows the strategy’s price range. After 8:00 am the range is fixed and trading can start. The purple line is the strategy’s unique level for a trailing stop loss order. More about this stop below.

Daily Breakout trading strategy.


When to open a position?

A long position is opened when the market closes above the price range. A short sell position is opened when the market closes below the price range. The number of signals is limited to four (two long and two short) per instrument per day. In the Traders Magazine article the author also promotes the use of support and resistance lines to determine if the edge of the price range is a good level to open a position.

Orders can be placed manually by placing a stop buy order on the high of the price range or by placing a stop sell order on the low of the price range. Orders can also be placed fully automatically by activating AutoOrder in the chart. In this case a position is bought (sold short) at the market price when the first candle closes outside the price range.

When to close a position?

The Daily Breakout strategy has a profit target and a stop loss. The position is protected by the strategy’s unique trailing stop loss. The stop loss follows a line, which is calculated on the basis of an instrument’s volatility. This line is always visible, even when there is no open position. The trader can thus see at which price level his trailing stop loss will start be placed.

Positions are never kept overnight. The NanoTrader’s time filter will close positions before 10:00 pm if the AutoOrder is activated.

This example shows a buy signal when the market goes above the price range. The profit target is reached without hesitation an hour and a half later. Notice the strategy’s unique trailing stop which follows the purple line.

Traders using Daily Breakout.

This example shows a short sell signal when the market drops below the price range. The profit target (green line) is not reached. The position is stopped out with a profit thanks to the special trailing stop. Notice again how the trailing stop follows the strategy’s purple line.

Breakout trading strategies.

3. The Narrow Range Breakout strategy

Description

The Narrow Range Break-out strategy is a swing trading strategy. Typical for swing trading, positions are kept a few days. The strategy is based on day charts. The trading tempo is low and therefore suitable for all traders. The Narrow Range Breakout strategy was developed in an article written by David Pieper published in Germany in the Traders' Magazine.

Click here to activate the FREE Traders' Magazine Breakout strategies pack in your NanoTrader Full platform.

Suitable for : Market indices (DAX, DOW, CAC...)
Instruments : Futures and CFDs
Trading type : Swing trading
Trading tempo : 20 signals per year
Using NanoTrader Full : Manual or (semi-)automated

When market volatility is low several days in a row, the market is said to be in a narrow range (NR).  Several trading strategies use narrow range patterns. The Narrow Range Breakout strategy as described in the Traders Magazine article defines its own NR pattern.

This swing trading strategy based on a day chart, gives around 20 signals per year. Because the open orders can be placed after the markets close, the strategy is particularly suitable for traders who don’t have the opportunity to trade during the day.

This example shows eight NR patterns. Only the end of the pattern and the breakout are highlighted by two horizontal lines with a purple background colour.

Range patterns in trading.


When to open a position?

The Narrow Range Breakout strategy uses a moving average to filter the trading signals i.e. not every time a NR pattern occurs, a position is opened. When the filter accepts long signals, it colors the chart background green. When the filter accepts short sell signals, it colors the chart background red.

Orders can be placed manually (place a stop buy order on the high of the narrow candle or a stop sell order on the low of the narrow candle) or automatically by activating the AutoOrder mode in the chart. In this scenario a position is bought (sold short) at the market price when the first candle closes outside the narrow range.

This example shows a buy signal. The trend is positive (green chart background). Buys signal will be accepted. A candle closes above the narrow range. This is a breakout and a position is bought.

Buy signals trading strategy.


When to close a position?

The strategy uses a profit target and two stop loss types. The profit target takes the volatility of the market into account. The price level of the profit target is calculated as a multiple of the ATR (average true range).

The initial stop loss is also based on the ATR. To keep the number of losing trades to a minimum, the initial stop is moved automatically (activate TradeGuard+AutoOrder or AutoOrder) to a new price level if the position reaches 0,5% profit. This is called a break-even stop.

This example shows several narrow range days. Market volatility is low. Three buy signals, indicated by green triangles, are triggered. The first two signals are closed due to the break-even stop. The third signal reaches the profit target.

Narrow Range and ATR.

This example shows two short sell signals, indicated by red triangles. Both positions are closed with a profit when the break-even stop is hit.

Traders Magazine Narrow Range Breakout.

Practical implementation

If you are not yet familiar with the NanoTrader Full platform, please visit the quick start page.

Open a chart of the instrument you want to trade (new chart button).

Select the "Traders Magazine 01" pack in the "WHS Store" folder.

Select, for example, the "Donchian Channel Breakout" in the "Traders Magazine 01" folder.

If required, adapt the settings.

If you want to trade semi-automatically (open position manually, close position automatically), activate TradeGuard+AutoOrder in the chart. If you want to trade automatically, activate AutoOrder in the chart.


Click here to activate the FREE Traders Magazine Breakout strategies pack in the trading store.

Click here for a FREE NanoTrader trading platform demo.