The Breakout Monster Trading System

The Breakout Monster Trading System is a unique breakout system coming off the

 spgm-systemfamily; it is designed to catch mainly the trending part of the day’s

 market direction.

In other words, it keeps you out of the market during periods of low volatility which

you all know could be very boring and does well to keep you at alert prior to trigger

of high market volatility.

THE BREAKOUT MONSTER

SETUP:

Pairs: All pairs

Timeframe: daily, 15mins and 5mins charts

Indicators: sma5 and sma20 (close)

Setup your chart with the indicators above and your chart shouldn’t look different

from the one below Chart-1

You may however set indicator colour of your choice but make sure the parameters

given are same.

BUY TRIGGER:

For a buy trigger, first of all go to daily chart of your pair and make sure sma5 is in

clear buy mode as shown in the chart below; Chart-2

Then switch to 5mins chart and be on the look out for a group of up to 15-36 candles

on the 5mins chart trending within a tight range then set horizontal line to mark upper

boundary of the range as well as lower boundary. Alternatively, you can do this on

15mins chart by looking out for up to 5-10 candles trending in a very tight range and

set horizontal lines to mark upper and lower boundaries of the tight range then switch

back to 5mins charts. Make sure the upper boundary should be at the high of the

candle with the highest high within the range and the lower boundary is at the low of

the candle with the lowest low within the range. Chart-3

Next after marking upper and lower boundaries with horizontal lines, you now wait

patiently for the trigger and what is this trigger? It is simply a clear divergence of

sma5 away from sma20 to the upside and this divergence is deemed valid and good to

trade only when sma5 crosses or breaks the upper boundary line of the range by at

least 5pips on the 5mins chart. You can always know the price of sma5 by simply

placing your mouse cursor at the tip of sma5 and the price will display (possible on

mt4). When this is confirmed, there must have been at least a candle close above the

upper boundary line so your entry for long will be at a retrace of price to touch sma5.

Chart-4

STOP LOSS:

Stop loss should be set below the lower boundary line by say 5-15pips.

EXIT TARGET:

Exit should be targeted at the next key resistance level at sight.

SELL TRIGGER:

For a sell trigger, be sure to check that daily chart sma5 is in clear sell mode as shown

in the chart below; Chart-5

Then switch to 5mins chart and be on the look out for up to 15-36 candles on the

5mins chart trending within a tight range then set horizontal line to mark upper

boundary of the range as well as lower boundary. Alternatively, you can do this on

15mins chart by looking out for up to 5-10 candles trending in a very tight range and

set horizontal lines to mark upper and lower boundaries of the tight range then switch

back to 5mins charts. Make sure the upper boundary should be at the high of the

candle with the highest high within the range and the lower boundary set at the low of

the candle with the lowest low within the range. Chart-6

Next after marking upper and lower boundaries with horizontal lines, you should wait

patiently for the trigger and what is this trigger? It is simply a clear divergence of

sma5 away from sma20 to the downside and this divergence is deemed valid and good

to trade only when sma5 crosses or breaks the lower boundary line of the range by at

least 5pips on the 5mins chart. You can always know the price of sma5 by simply

placing your mouse cursor at the tip of sma5 and the price will display (possible on

mt4). When this is confirmed, there must have been at least a candle close below the

lower boundary line so your entry for short will be at a retrace of price to touch sma5.

STOP LOSS:

Stop loss should be set above the upper boundary line by say 5-15pips.

EXIT TARGET:

Exit should be targeted at the next key support level at sight.

SUMMARY

The idea behind these setups is basically catching breakouts in the direction of the

day’s trend and that is why you have to see daily chart for trend confirmation. If

however, you get a breakout in the opposite direction of the day’s trend then I will

advice you ignore such breaks because it may most likely be false.

Just like every other system, spgm-4 is not guaranteed to giving you 100% results,

there’s bound to be false breaks once in a while however, this incidents of false breaks

could be greatly minimized by picking setups coming off mainly between Asian

market open and London market close…01:30hrs – 17:30hrs GMT. Best results were

achieved within this period while spgm-4 was still in test mode.

Another interesting observation made on spgm-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, this means that price will most likely trend below

sma20 for a fairly long while and a first retrace of price to touch sma20 after crossing

the boundary line usually result to a strong bounce of price off sma20 to hit a new

high/low and most times it results to a 1-2-3 formation setup which means more drop

or rise of price in the direction of breakout and additional entries won’t be a greedy

idea at all. Chart-8