All Price Action Trading Tips. RSS Feed. Professional Trading Education. The First Strike Trading System is an interesting combination of a breakout system and a time-based system. It uses a version of a breakout system to determine entries and then uses a time deadline and an initial stop to determine the exit.
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All Price Action Trading Tips. RSS Feed. Professional Trading Education. The First Strike Trading System is an interesting combination of a breakout system and a time-based system. It uses a version of a breakout system to determine entries and then uses a time deadline and an initial stop to determine the exit. The basis for the system is the opening price of the week on Monday morning. The system notes this price and then places a Buy Stop order 50 points above it and a Sell Short Stop 50 points below it.
That way, if the price moves 50 points in either direction during the week, that breakout will initiate a position. It also exits all positions at the close every Friday. These exit rules make this a short term trading system that has some measure of downside protection. During that time, the system was able to generate positive returns.
The system posted a profit factor of 1. This would limit the system to only making trades in the same direction as the long term trend, which he defined using the unit SMA. It also raised the profit factor to 1. What we have here is a very unique take on a breakout system. By adding the trend filter, Jeff was able to improve the system even further. Of course, these short term trades will also rack up commission costs. The First Strike Trading System was designed to trade forex markets.
However, if we used percentage breakouts instead of the 50 point breakouts to identify entry points, we could take the system and trade it on a wide assortment of financial markets. This would give us a more robust, diversified approach.
This could possibly lead to a higher success rate. Another idea to improve this system would be to put a deadline on entries. This would likely result in a good deal of slippage and commission costs. I would like to find out how a system with the same entry rules would perform using either a trailing stop or a breakout for an exit signal.
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