The Breakout Monster Trading System is a unique breakout system coming off the
spgm-systemfamily; it is designed to catch mainlythe trending part of the day’s
market direction.
In other words, it keeps you out of themarket during periods of low volatility which
you all know could be very boring anddoes well to keep you at alert prior to trigger
of high market volatility.
THE BREAKOUT MONSTER
SETUP:
Pairs: All pairs
Timeframe: daily, 15mins and 5minscharts
Indicators: sma5 and sma20 (close)
Setup your chart with the indicatorsabove and your chart shouldn’t look different
from the one belowChart-1
You may however set indicator colour ofyour choice but make sure the parameters
given are same.
BUY TRIGGER:
For a buy trigger, first of all go todaily chart of your pair and make sure sma5 is in
clear buy mode as shown in the chartbelow;Chart-2
Then switch to 5mins chart and be onthe look out for a group of up to 15-36 candles
on the 5mins chart trending within atight range then set horizontal line to mark upper
boundary of the range as well as lowerboundary. Alternatively, you can do this on
15mins chart by looking out for up to5-10 candles trending in a very tight range and
set horizontal lines to mark upper andlower boundaries of the tight range then switch
back to 5mins charts. Make sure theupper boundary should be at the high of the
candle with the highest high within therange and the lower boundary is at the low of
the candle with the lowest low withinthe range.Chart-3
Next after marking upper and lowerboundaries with horizontal lines, you now wait
patiently for the trigger and what isthis trigger? It is simply a clear divergence of
sma5 away from sma20 to the upside andthis divergence is deemed valid and good to
trade only when sma5 crosses or breaksthe upper boundary line of the range by at
least 5pips on the 5mins chart. You canalways know the price of sma5 by simply
placing your mouse cursor at the tip ofsma5 and the price will display (possible on
mt4). When this is confirmed, theremust have been at least a candle close above the
upper boundary line so your entry forlong will be at a retrace of price to touch sma5.
Chart-4
STOP LOSS:
Stop loss should be set below the lowerboundary line by say 5-15pips.
EXIT TARGET:
Exit should be targeted at the next keyresistance level at sight.
SELL TRIGGER:
For a sell trigger, be sure to checkthat daily chart sma5 is in clear sell mode as shown
in the chart below;Chart-5
Then switch to 5mins chart and be onthe look out for up to 15-36 candles on the
5mins chart trending within a tightrange then set horizontal line to mark upper
boundary of the range as well as lowerboundary. Alternatively, you can do this on
15mins chart by looking out for up to5-10 candles trending in a very tight range and
set horizontal lines to mark upper andlower boundaries of the tight range then switch
back to 5mins charts. Make sure theupper boundary should be at the high of the
candle with the highest high within therange and the lower boundary set at the low of
the candle with the lowest low withinthe range.Chart-6
Next after marking upper and lowerboundaries with horizontal lines, you should wait
patiently for the trigger and what isthis trigger? It is simply a clear divergence of
sma5 away from sma20 to the downsideand this divergence is deemed valid and good
to trade only when sma5 crosses orbreaks the lower boundary line of the range by at
least 5pips on the 5mins chart. You canalways know the price of sma5 by simply
placing your mouse cursor at the tip ofsma5 and the price will display (possible on
mt4). When this is confirmed, theremust have been at least a candle close below the
lower boundary line so your entry forshort will be at a retrace of price to touch sma5.
STOP LOSS:
Stop loss should be set above the upperboundary line by say 5-15pips.
EXIT TARGET:
Exit should be targeted at the next keysupport level at sight.
SUMMARY
The idea behind these setups isbasically catching breakouts in the direction of the
day’s trend and that is why you haveto see daily chart for trend confirmation. If
however, you get a breakout in theopposite direction of the day’s trend then I will
advice you ignore such breaks becauseit may most likely be false.
Just like every other system, spgm-4 isnot guaranteed to giving you 100% results,
there’s bound to be false breaks oncein a while however, this incidents of false breaks
could be greatly minimized by pickingsetups coming off mainly between Asian
market open and London marketclose…01:30hrs – 17:30hrs GMT. Best results were
achieved within this period whilespgm-4 was still in test mode.
Another interesting observation made onspgm-4 during test running is that after the
trigger for buy/sell and entry is made,if sma20 now in turn breaks or crosses the
barrier in same direction as sma5, thismeans that price will most likely trend below
sma20 for a fairly long while and afirst retrace of price to touch sma20 after crossing
the boundary line usually result to astrong bounce of price off sma20 to hit a new
high/low and most times it results to a1-2-3 formation setup which means more drop
or rise of price in the direction ofbreakout and additional entries won’t be a greedy
idea at all. Chart-8
