This is another EA that can be used to trade the forex ma. To understand it, let us first start with what a forex EA is, a break out, before we can go ahead to the basic theory of the daily breakout forex EA.
WHAT IS A FOREX EA?
A forex EA (expert advisor) is a software application that automatically generates trading signals on the trader’s behalf, and is only applicable on the metatrader platform. An EA can trade round the clock, is not vulnerable to emotions, is quick in reacting to market movements, and is not prone to human errors. Its application is one of the most regarded methods of auto trading in the forex market. So, when you think EA, think auto trading and metatrader platform.
WHAT IS A FOREX BREAKOUT?
A breakout in the forex market has to do with the movement of price. When the price of a commodity moves through an identified level of resistance, that commodity is said to have experienced a breakout. This is usually followed by heavy trade volume and an increased amount of volatility. There are two different types of breakout;
Now that we have an idea of what this two is all about, let us then get on to the daily breakout forex EA strategy.
A DAILY BREAKOUT EA STRATEGY
This has to do with the simplest ways one can trade a break out. We will take a look at one out of the many breakout strategies there is in the forex market. Traders are advised to take their time and back test it before applying it to their trades. Note that many forex traders lose their money in the process of trading the forex market. This happens mostly to traders that goes ahead to use an EA without understanding the underlying trading strategy
So, here goes
It is a four step strategy
1. Include the DCN (Donchain Channel Indicator) to your chart. This should be a chart of between one to four hours. The input settings should be 55
2. Recognize the direction of the trend to enable you filter your trade solely in the direction of the trend
3. Use entry orders to enter on a break of the DNC. This can be done by incorporating the trend and the Donchain channel together
4. Use a stop loss to exit on a break of the opposing DNC. Here, a manual trading stop is applied.
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