How is Breakout determined?

Unlike other products in our FX Radar Series, where we keep the algorithm for deriving the signals proprietary, we will reveal entirely how the signals for FX Breakout Radar are generated. In fact, it is already an open secret in the industry!

FX Breakout Radar does not depend on complex algorithms. It is based on a simple Donchian channel breakout strategy employed by some of the most successful traders of our time. The only addition we included in is a filter for the Continued Breakout signals where continued breakout is not considered as an entry signal to you.

From the figure above, we can see the Donchian Channel (Red and Blue lines) enclosing the price.

When the channel line is broken initially, there is a SELL signal. Subsequently the channel line is breached again (highlighted by the 2 pink boxes). However in this case, there is no SELL signal. Why? This is because these are continued breakouts within X periods from the initial breakout. You do not consider these breakouts although technically they are.

That’s it. That’s all there is to this breakout strategy! A simple yet hugely profitable strategy if you can manage your money well.