The Kill Zone Asian Breakout

[Dewey McG]

I am using this on a live account.


The Kill Zone Asian Breakout

This is one of the methods presented by GG53 here: http://www.forexfactory.com/showthread.php?t=381696 Please read the thread for more detailed explanations of why this strategy works. GG53 said he will subscribe if I open a thread here but his explanations are already posted. I will stick with basics, trade rules as well as several screen shots so you can see how to trade.

This system uses volume-based indicators. No lagging indicators are used at all—those only tell you where you have been. Volume leads price—it tells you when the big guys are making a move. The primary indicator we are using is the Gadi_OBV (On Balance Volume). If you want a brief explanation of what this is you can start here: http://www.investopedia.com/terms/o/onbalancevolume.asp The Gadi_OBV is much better than the one that comes free on your platform which simply will not work correctly.

Rules:

These are very simple and you will not want to believe it at first, so trade on demo until you can see how well it works.

Times for the open and close of the channel are between 12:00 AM to 7:00 AM London time. Use your broker's time to adjust the Gadi_OBV. It will draw a channel on the OBV (NOT on the price bars). We are trading a breakout of the VOLUME.

Do NOT take any trades while the OBV is in the kill zone—inside the channel. The reason it is called the kill zone is because of you take trades when OBV is inside this channel it will KILL your account.When it breaks out of the channel we know the big players are making their move. Before that are the stop hunts. Pass if there was a big move during the Asian session.

We use the Gadi_TickVolume for confirmation. It must be above 0 for buys and below 0 for sells. It's not part of the rules, but I prefer to see the angle also matching (up for longs and going down for sells). Also—do not trade the trade if the entry candle is a large candle. The move might already be over so pass on this one.

Optional confirmation, though not necessary (you will see some of my charts with either one):

Either Gadi_NormalizedVolume (I stopped using this as it didn't really make any difference but this could become more accurate if someone can change this indicator to show volume vs. session average),

Gadi_Currencies. I only just started testing this to see if it helps but so far it has not kept me out of any trades. (Make sure if you use this to add the suffix if your broker uses it)

Trade management:

Trading hours - London Open till London close+2.
Don't trade on Friday. ( I have cheated on this one, but if you do, then do so with caution)
Don't trade 30 minutes before major news. If you have open trades - close them.


SL = Previous Swing of OBV. Look at the Gadi_OBV and see where the last swing high or low was of the OBV. Then look at the candle. The price at that peak is your SL

TP = SL*2

When 7-8 pips profit - move SL to BE+1, remove TP, and
Apply Trailing-Stop ~5 pips.

Important !!
If not in profit within 4 bars - close the trade no matter what.
Reason: We are not in a business of guesswork...
Our signal was either false or something new happened in the market.
Waive your ego and don't trade hopes.


I will post several of my trades so you can see how it works. Save the technical questions for GG53

[Dewey McG]

Now for some of the trades I have taken so you can see how well it worked. I have several more but didn't want overkill. I will post more going forward.

[Dewey McG]

Here are a few earlier trades (and some I passed on with explanation). The Normalized volume is not needed and I don't use that any more.

[garyfritz]

Thanks for sharing, Dewey. Sure wish more of these strategies worked in US time. London open to close+2 is 1am - 11am for me. That's pretty tough, even if I didn't have to work for a living.

I don't suppose GG53 shares the source for his indicators? I hate using black-box "magic" indicators. I want to look at the code and understand what they're doing, and maybe modify them for my own use.

[Dewey McG]

Updated template with Killian's indicator. It does the same thing but has 2 advantages. The arrows allow for visual back testing so you can have more confidence about how well this works and it has an alert to go off when the channel is broken. Make sure to adjust for your broker's times. I use TheCollectiveFX which is London time.


GG53 and Killian are also working on something which may prove to be truly amazing. Serious coders please have a look here: http://www.stevehopwoodforex.com/phpBB3 ... =27&t=3210

[Dewey McG]

Thanks for sharing, Dewey. Sure wish more of these strategies worked in US time. London open to close+2 is 1am - 11am for me. That's pretty tough, even if I didn't have to work for a living.

I don't suppose GG53 shares the source for his indicators? I hate using black-box "magic" indicators. I want to look at the code and understand what they're doing, and maybe modify them for my own use.

I feel your pain. I am EST.

Here is an mql versions of the Gadi_OBV already on this forum elsewhere but it doesn't draw the channel.

[kwanann]

Based on the rules it seems quite simple to automate and the thread at ff seems to point to an EA, do you happen to have it? Easier to see it run and mark the trades than paper trading it.

The indi seems quite simple, just some calculations based on candle open, close, high and low, intereztubg

[Kilian19]

Yes I already wrote the corresponding EA over at FF but it doesn't seem to be profitable yet ... As it is a work in process I don't think sharing here would be such a great idea. I would have to reupload it every time I change something at 2 places. Let us finish the early bugfixing and adjustments and I will come back to you.

[zTB]

Sure wish more of these strategies worked in US time. London open to close+2 is 1am - 11am for me. That's pretty tough, even if I didn't have to work for a living.

There should be volatility clusters throughout the trading day?

As a starting point, please insert the below coded indicator on 15 minutes chart 1 to 4 bars before US open, and I think you will see a number of possibilities. The idea is to go with the green as it goes above, or below, the red bar(s):

Code: Select all

/////ALERTbar///

Inputs: Alert_Color(Red), StartTime (715), InBetweenTime1 (715), InBetweenTime2 (730), EndTime(730), Trade_Color(DarkGreen), TradeTime (745), CloseTime (1315), Close_Color (DarkRed);


If Time = StartTime 
then begin
	PlotPaintBar(High, Low, Open, Close, " ", Alert_Color);
	
	end;
	
If Time = InBetweenTime1 
then begin
		
	PlotPaintBar(High, Low, Open, Close, " ", Alert_Color);
	end;

If Time = InBetweenTime2 
then begin
		
	PlotPaintBar(High, Low, Open, Close, " ", Alert_Color);
	end;
	
		
If Time = EndTime 
then begin
		
	PlotPaintBar(High, Low, Open, Close, " ", Alert_Color);
	end;

If Time = TradeTime 
then begin
		
	PlotPaintBar(High, Low, Open, Close, " ", Trade_Color);
	end;

If Time = CloseTime 
then begin
		
	PlotPaintBar(High, Low, Open, Close, " ", Close_Color);
	end;

Z

[gg53]

Thanks for sharing, Dewey. Sure wish more of these strategies worked in US time. London open to close+2 is 1am - 11am for me. That's pretty tough, even if I didn't have to work for a living.

I don't suppose GG53 shares the source for his indicators? I hate using black-box "magic" indicators. I want to look at the code and understand what they're doing, and maybe modify them for my own use.

garyfritz,

Gadi_OBV "channel breakout" strategy is for ANY area of consolidation, not just the Asian session.

G.