Breakout indicator Metatrader 4, best strategy
Breakout indicator is good tool trading to help find key level strategies
In forex trading, traders use the trend following and breakout strategies, both of which have the same goal, getting profit.
The following trend strategy is a strategy that opens a position in the direction of the major trend direction.
Strategy breakouts rely on conditions where the support and resistance zones are no longer valid in maintaining their zones.
Breakout trading will open a position in the break line zone in a certain area.
The idea is that when a certain zone no longer maintains its price line, it will create a new zone.
The strategy is quite simple, but there are several ways you can use it to find a breakout.
In this article, we will explain some of the best breakout indicators for mt4 and mt5, which we summarize from several sources.
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Breakout trading explained
Breakout strategy has been many traders who use this strategy to capture profit opportunities from the momentum where the price has broken the key zone, or support and resistance zone.
Utilizing breakouts can provide high-profit opportunities, provided that the breakouts that occur are not fake.
Thus the trader will focus more on the key zone, before deciding to use a breakout strategy. Even in using this breakout strategy, several indicators can be utilized to find the momentum of the breakout.
There are many different breakout indicators out there, but we will give a few examples.
There are many breakout indicators. But in general, the breakout strategy is to use support and resistance and also use swing highs and swing lows.
And in its development, there is also a London breakout strategy which is quite popular among traders.
How to use a breakout indicator to find entry points?
Because there are many different types of indicators, of course, this can also lead to differences in how to find entry points in each strategy.
As using price action in finding breakouts.
For example, by using a pin bar, inside a bar, or an outside bar, using an indicator needs to look at the function of the indicator and how the price reacts to the indicator.
Some breakout indicators that are often used by traders are MACD, RSI, and ATR. But there are also many custom indicators from third parties that also function as strategy breakouts.
Implementing the best profitable strategy must also be supported by brokers who have a clear reputation and experience and regulations.
You can read the broker’s review on this site.
But we recommend that our sponsor TenkoFX who has been established since 2012, has more than 15 years of experience in the financial markets.
Breakout indicator strategy using ATR
ATR stands for Average True Range, this indicator is usually to measure the stop loss distance. But it turns out this indicator can also be used for strategy breakouts.
It’s just that it doesn’t work alone. It still needs additional indicators to be able to take advantage of the momentum breakout based on this indicator.
Additional indicators that can be used are EMA with a period of 14 and resistance support to find swing highs and swing lows. You can use fractals to find this by looking at previous fractal highs and lows.
Here is image example combination ATR, fractal, and EMA
How to attach the ATR breakout indicator
- Open the Insert menu -> Indicators -> Oscillators -> Average True Range, set “Period” at 14, then click OK.
- Browse the “Navigator” tab on the left side of the chart. Open the Indicators menu, then search for “Moving Average” and drag the indicator directly in the ATR window.
- In the Moving Average settings window, the “Apply to” menu setting in option the “Previous Indicator’s Data”.
- Select Exponential in the “Method” column, and write 14 in the “Period” column and click OK
- Attach Fractals by opening the Insert menu -> Indicators -> Bill Williams -> Fractals. There is no change in settings for fractals.
How to trade breakout indicator
How to trade breakout is to find a break line point at support and resistance, so to determine the entry you must pay attention to the price is in the zone.
In this ATR breakout using the swing high and swing low of the fractal indicator.
- The entry method is to look at the crosses between EMA and ATR, if the price is in the resistance zone or swing high, then open buy if the EMA line crosses the ATR from the bottom to up.
- Conversely for short or sell signals is to see the price is at the swing low level or support zone and use a cross between EMA and ATR if EMA crosses the ATR from above this down is a sell signal.
For stop loss you can use the ATR value or choose to use support and resistance, this will certainly give a different amount of risk.
While your profit target can pay attention to price action or use support and resistance levels from history or use a trailing stop.
Breakout indicator strategy using MACD
MACD is one of the popular indicators that measure price volatility, by looking at a higher histogram meaning that volatility is increasing.
Conversely, a shorter histogram means weakening volatility. But this indicator is also able to breakout strategy.
How to use MACD as a breakout strategy we need to add a fractal indicator that serves to find support and resistance as a zone in determining entry breakouts.
How to attach an indicator
- You can find the MACD indicator via Insert – >> Indicator – >> onscillator – >> MACD.
- And fractal through Insert – >> Indicator – >> Bill Williams – >> Fractal.
You can use this strategy on all timeframes, but the higher the timeframe, the distance of support and resistance from fractals will be wider than using the small timeframe.
You can try using the M15 timeframe for the short term.
How to trade breakout mt4
- MACD shows below level 0, giving an indication of a downtrend.
- Fractal shows the price is at the support level.
- Place sell stop order with 1-2 pip also takes into account the spread, below the fractal low.
- You can place a stop loss on the swing high from the fractal, or according to the risk that is ready to bear it.
- A profit target with a risk-reward ratio of at least 1: 1 or greater.
- MACD shows above level 0, giving an indication of an uptrend.
- Fractal shows the price is at the resistance level.
- Place buy stop order with 1-2 pip also takes into account the spread, above the fractal high.
- You can place a stop loss on the swing low from the fractal, or according to the risk that is ready to bear it.
- A profit target with a risk-reward ratio of at least 1: 1 or greater.
As an additional note, if you find a fractal below the previous fractal in the uptrend, there is no trade.
Conversely, if you find a fractal above the previous fractal in a downtrend, then no trade.
This breakout strategy based MACD and fractal most working in the trending market, so it will better avoid the ranging market.
London breakout strategy
London breakout strategy is already very well known, which utilizes the surging movement in the London session.
Before the London session opened there was already a market in the Asian session that was already underway.
Usually, the highest market activity is seen in the European session, so with this strategy, we will try to look for opportunities by sticking to the price range during the Asian session.
Actually you don’t need to use any indicators to run this London Breakout forex trading strategy.
How to trade
- Open the graph on the H1 timeframe, you can trade on major pair, EUR/USD, GBP/USD, EUR/JPY.
- Create a box on the chart with the last three candlesticks that appear before the London session begins.
- Based on the “box” above, draw two horizontal lines, each of which functions as support and resistance. This means you have to draw one horizontal line on the top side of the “box” and another horizontal line on the bottom side of the “box”.
- Place a Stop Order Buy Stop is about 5 pips above the resistance, place SL at Sell Stop level.
- Sell Stop is about 5 pips below the support, place SL at Buy Stop level.
- If one of the Stop Orders is executed, you must immediately cancel one another order.
This means that if a Buy Stop is executed then immediately cancel the Sell Stop order and vice versa.
To use the above strategy you need to know when the Asian session ends, you can look for it on the internet market hour indicator.
This strategy is very simple but powerful, but there are weaknesses in this strategy, especially the possibility of being caught in bull and bear traps.
London breakout indicator
Because this strategy is very popular, then some people develop an indicator called the London breakout MetaTrader 4 indicator.
One example of the London Breakout indicator is shown below, although it is quite complicated, you will be able to understand the concept.
This indicator uses the M15 timeframe, but the appearance of the indicator is quite complicated, only focus on the LB2 Box linen color box to find the London strategy breakout.
Breakout indicator trading support and resistance
Breakout with support and resistance is the basis of a breakout strategy, besides using swing highs and swing lows.
To use this strategy you need to understand the concepts of support and resistance and draw on a chart.
You can use horizontal lines to mark support and resistance levels.
Breakout support and resistance strategies utilize key levels when the price broken line occurs at that level.
The idea is that when prices cross the support and resistance levels, it will become a new level of support and resistance.
The picture above is the USDJPY pair at the H1 timeframe.
After finding support and resistance levels we can place pending buy stop and sell stop orders at these key levels. For stop-loss we can also place at this key level, if one pending order is active, then another pending order is canceled.
Target profit ideally using the ATR indicator, or you can also choose a risk-reward ratio of 1: 1 But if you are confused about how to find support and resistance, another way is to use the help of support and resistance indicators.
Many types of indicators are created, but because of the different programmers also will be different results in finding support and resistance levels.
Support/resistance breakout indicator
Determining support and resistance manually, sometimes traders find it difficult to find the right position in determining the breakout. This support/resistance breakout indicator can help you to find a breakout signal.
How the image of support/resistance breakout indicator can be seen from the picture below:
How to use the Support/resistance breakout indicator is very easy, even beginners can easily get directions through the arrow signals that appear after the breakout. But this indicator also has weaknesses, when there is a fake breakout, it is also necessary to understand the concept of volume market trends.
At low trading volumes, prices move sideways and breakout signals are often false. Besides that, it must always maintain risk management when placing orders.
- After downloading then install it on the mt4 platform. First, open the zip file and extract the indicator to any folder.
- Through mt4 in the File menu select open data folder and copy and paste the indicator file to the “Indicator” folder then refresh in the navigation window to bring up the indicator on the selection.
The breakout strategy is one of the ways traders try to capture the opportunities available in the forex market or the crypto market, while breakout indicator as help tool among traders.
This strategy will be better if applied to the trending market conditions after the sideways phase ends.
Where the movement has begun to be high, this strategy can provide profits with high probability.
In practice to lower risk, you can choose a strategy, for example, London breakout strategy, or support and resistance breakout.
Focus on implementing the strategy so that you don’t blindly enter the entry point, enter only when conditions are met, and avoid when conditions are not met.
Don’t forget to always keep money management, this is the key to the success of professional traders.
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