Range Breakout Trading System

Range breakout trading is popularized in “Day Trading with Short Term Price Patterns and Opening Range Breakout” book written by Toby Crabel. This range breakout trading is to identify the minimum and maximum market price fluctuation during the market trading session. the basic rules of this trading strategy are open short trading position if the market price breaks the minimum support level and open long trading position if the market price breaks the maximum resistance level.


The range breakout trading system is used market participants sentiment method which is reflected during the early session in the opening market, analyzing the bullish and bearish trend movement at the early of the market session. statistic told that the bottom and top of the market period is 33 % reflected for 15-30 minutes at the beginning of the market session.


The main problem use in this strategy is if it comes to decide the right session in forex market trading because the Forex market open 24 hours a day and has several trading sessions. Some forex traders consider the foreign exchange market session is start at 22:00 GMT and other traders consider that the forex market is start at 8:00 GMT or the beginning the London session ( The London session is the biggest transaction volume in forex market).


For this reason we should try many time trading variations using upper and lower breakout to get the best strategy. One of trading variations that I used is breakout trading at 5:00 am EST. And here are the trading rules, this breakout trading system is using EURUSD, GBPUSD, and 1 hour time frame. Identify the maximum and minimum price between 5:00 – 9:59 GMT or using 5 candlestick 1 hour.


Open short trading position 5 pips below the minimum price (you must using stop order). Profit target 140 pips for GBPUSD and 90 pips for EURUSD, put stop loss 3 pips higher the maximum.
Open long trading position 5 pips above the maximum price (you must using stop order). Profit target 140 pips for GBPUSD and 90 pips for EURUSD, put stop loss 3 pips lower the minimum. If your trading position still open at 18:00 GMT, you must close it.


Here are my trading back test result for this breakout trading system
EURUSD without optimization

GBPUSD without optimization

EURUSD trading with optimization trading

Here are the optimizations for my back test
Range start 9:00 am GMT, range end 10:00 am GMT, close trading 23:00 GMT and take profit 190 pips.

GBPUSD with optimization


Conclusion
Range trading breakout could be become a profitable trading system when we pick the right forex currency.