The Cable 15/30: A Free GBP/USD Breakout System

The Trading System,

This 15-day breakout system is designed to take advantage of the volatility and powerful breakouts that occur on the GBP/USD currency pair. Breakout systems are among the oldest, simplest and most effective trading systems. These systems work well because they get you into a major move on the right side of the momentum when a major market high or low is broken. The more significant the major high or low is, the more significant its breaking and the more likely the breakout is to succeed. The disadvantage of this is the more significant the high or low our system uses the fewer trading opportunities we get. One of the ways we can build a profitable trading system from the breaking of the relatively insignificant highs and lows (such as a 15-day breakout) is to make a small profit even when the breakout fails by having a small profit target. This way, even when the breakout fails the momentum that occurs when it happens will often be enough to take the market to our profit target allowing us to exit at a profit, even when the breakout has essentially failed and the market later reverses. The GBP/USD currency pair is ideal for this sort of trading system, as it tends to have the volatility and momentum around breakouts necessary for it to work.

Rules for the Cable 15/30 Breakout Trading System,

• Go long as soon as the 15-day high is reached with a profit target of 30 pips (points).
• Close the long position at the end of the day regardless of the price if the 30 pips profit target was not reached.
• Use a stop loss of 2% of the closing price on the day you went long.

• Go short as soon as the 15-day low is reached with a profit target of 30 pips (points).
• Close the short position at the end of the day regardless of the price if the 30 pips profit target was not reached.
• Use a stop loss of 2% of the closing price on the day you went short.

The Results,

GBP/USD 15 Day Breakout With 30 Pip Target System (22/09/1999 to 29/07/2009) -

GBP/USD 30 Day Breakout With 30 Pip Target System (13/10/1999 to 29/07/2009) -

GBP/USD 45 Day Breakout With 30 Pip Target System (03/11/1999 to 29/07/2009) -

GBP/USD 60 Day Breakout With 30 Pip Target System (24/11/1999 to 29/07/2009) -

GBP/USD 75 Day Breakout With 30 Pip Target System (03/12/1999 to 29/07/2009) -

GBP/USD 90 Day Breakout With 30 Pip Target System (05/01/2000 to 29/07/2009) -

Suggested Improvements,

There are several things that I think have the potential to improve this trading system. Better stop-losses for example may improve the winning pips to losing pips ratio, a better breakout time frame might be used rather than the 15, 30, 45, 60, 75 or 90 day periods that I have given. But the single biggest way to improve the system that I can think of would probably be to keep to a small breakout time frame (i.e. 15 days or less) with an additional check to ensure that trades are only taken in the direction of the longer-term trend. I might make such a system later, but for now I will leave these improvements for the reader so that they can make this system their own.

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