This time, we will introduce the support tool “Trendline Breakout Order-kun” that automatically draws the trendline using ZigZag and automatically enters after the breakout.
l The appeal of line trading that does not rely on indicators
MetaTrader 4 (hereinafter referred to as MT4), a chart software that has gained tremendous trust from technical analysis traders, has an attractive indicator.
You can build a trading strategy using only the standard indicators such as moving average, MACD, RSI, and stochastic, and the original custom indicator will expand your strategy.
While this is an attractive indicator for technical analysts, there are also weak points.
Because the indicator is calculated using past price data, it is difficult to respond to sudden price fluctuations.
Therefore, in recent years, the line trade that attracts attention at the timing of breakout of those lines using support & resistance and trend lines is attracting attention. Since these lines are price points that have become milestones in the past, if you can capture the moment of a break, there is a high possibility of generating significant profits.
The famous trade group Turtles had gained huge profits from the breakout method of the high and low line, but trend line breakout has survived as an effective method even after decades.
l Is it difficult to draw a trend line?
Line trading is an effective technique, but in general it doesn't feel very popular.
One reason for this is the lack of awareness of drawing the trend line. It is a trend line that can be easily closed once you get used to it, but it is difficult for beginners to determine which high and low prices to use.
It is no exaggeration to say that the fact that there are many traders who cannot keep up with the trend line is preventing the spread of line trade.
l An EA that automatically pulls the trend line and enters by breakout
Trendline breakout ordering will automatically draw the trendline using the high and low prices of ZigZag. Since it is a semi-discretionary EA instead of an indicator, it supports automatic trading, and it is not necessary to stick to the front of the computer and constantly monitor the chart.
First of all, I would like to check the trend line drawing function of this EA with the image below.
You can see that an effective trend line is drawn using the high and low prices of the ZigZag line.
Furthermore, if you want to draw a longer-term trend line, you can change the ZigZag value in the parameter. For example, the image below has been changed to depth (14), deviation (5), backstep (3).
When the validity of the trend line is lost due to price fluctuations, it is possible to redraw the trend line. The timing for redrawing is the timing when the high and low prices of ZigZag are updated.
l Entry after breaking the horizontal line
It is a specific entry method, but using the entry horizontal line calculated from the trend line, if you break the red horizontal line from the bottom to the top, it will be long, if you break the blue horizontal line from the top to the bottom, you will enter a short entry Implement.
Since the horizontal line can be moved by mouse operation, the entry point can be moved slightly.
In addition, since a stop loss is placed at the position of the horizontal line on the opposite side during entry, it is safe because the loss is limited even when the position reverses due to sudden changes in the market price.
The image below captures the actual entry.
You can see that the price breaks the blue entry horizontal line, and you can see that the next leg is selling. At the same time, a stop loss is placed at the position of the red entry horizontal line.
1. Trend line drawing
2. Trend line breakout confirmation
3. Entry in the direction of the breakout
If you use “Trendline Breakout Order-kun”, these three flows will be done automatically.
In addition, since settings such as buy entry only and sell entry only can be changed with EA parameters, it is possible to use semi-automatic trading with awareness of fundamentals.
The trend line will not be the same regardless of who draws it, but will be different depending on which peak value is selected. I think this ambiguity is one of the factors that make novice traders feel that the hurdle is high.
To solve this problem, Trendline Breakout Order-kun used an approach that automatically draws trendlines using the ZigZag indicator.
If the current price of a currency breaks above the trend line, it will automatically place a buy order, and if it breaks below, it will automatically place a sell order.
In other words, I think that the biggest merit of using this tool is that you can build your own strategy after leaving all the troublesome part of line trading to “Trendline Breakout Order-kun”.