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Range BreakoutGR

1. PURPOSE

This strategy is helpful for breakout trading. Idea is to capture a small swing within a large swing.

2. INPUT

We have four inputs for this strategy which serves our three purposes.

  1. For TREND (Enter ZMA Period): We are using ZERO LAG MOVING AVERAGE to identify a trend.
  2. For identifying STOP and TARGET (Enter ATR Period): This input helps us identify a stop and target for our trade.
  3. For identifying contraction (Enter MaxBar Period, Enter HighLow Range Period): This input helps us identify a contraction or a trading range.

Use default value for each input. If you are looking for a large range breakout then use Max Bar Value as 21 and High Low Range as 5.

Range Breakout GR 1

3. HOW TO INTERPRET

Markets go through the cycle of Contraction and Expansion. Contraction means sideways movement of prices. There will be minor swings but those swings will quickly end. After such movements prices tend to move in a single direction. That is expansion. This strategy helps you to catch the expansion. For identifying a contraction we have used a tool which helps us to identify a trading range.

Very often the expansion comes in the direction of main trend. For this purpose we have given a filter of trend as a Zero Lag Moving Average (ZMA). This strategy allows you to take the trade in the direction of ZMA.

Now we don’t know when this expansion will end and also when it is going to fail. For this purpose we have used ATR based Stop and Target. We are maintaining a ratio of 1:2 for stop and target.

Range Breakout GR 2

4. OUTPUT

It’s a complete trading strategy which covers the every aspect of trading.

A green arrow (below the price bar) means a long position is taken here.

Red colour ZERO (0) below the price bar means the long position have closed here.

A red arrow (above the price bar) means a short position is taken here.

Green colour ZERO (0) above the price bar means the short position have closed here.

Range Breakout GR 3

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