The term “Crossout” has been coined by the union of the cross and breakout strategies found in many places. Crossout is only used on the 1 Hour chart.
Currency pairs: majors.
Forex Indicators:
5 EMA, close.
13 EMA, close.
100 EMA, close.
Buy Signal: Once the EMA 5 has crossed the EMA 13 upwards, you look for a completed up candle (blue on my chart). When you see the up candle, you need to see a breakout of that candle within the next 2 bars. Enter a buy position 2 pips above the high of the up candle.
Remember, you are only looking for the first breakout in the same direction as the cross.
Sell Signal: Once the EMA 5 has crossed the EMA 13 downwards, you look for a completed down candle (red on my chart). When you see the down candle, you need to see a breakout of that candle within the next 2 bars. Enter a sell position 2 pips below the low of the down candle. Remember, you are only looking for the first breakout in the same direction as the cross. See figure. Do not enter when you are heading directly into the EMA 100 as this line is the s/r line just as it is on the daily chart. Make sure that there are at least 10 pips between your entry and the EMA 100. When this is the case, take profit or place a limit at the EMA 100.
Once the cross has occurred, ensure that there is a slight gap (1 pip) between the 2 EMAs before entering a position. If there is no gap, you may be entering a trading range as shown in Figure with breakout candle.
A breakout of the previous bar in the same direction of the cross is unlikely to occur in a trading range and that is what makes this a great strategy. It inherently protects you from whipsaws in a range.
Stops
Place an initial stop loss 35 pips away from your entry price. Once a profit of 10 pips has been achieved, move stop to breakeven. If, in your opinion, you are trading in a volatile period (spikes in the vicinity), wait a little longer before you move your stop to breakeven.
If, in your opinion, there is no clear trend in the same direction as your entry (determined by day and 4 hour charts, discussed earlier), or the breakout candle and the candle before it are relatively small, then move the stop to breakeven a little sooner - at 7 pips profit. Slow moving candles generally tend to reverse direction in my experience.
Exit
Exit when the cross occurs in the opposite direction or with profit target predetermined.
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