The 2 MA Channel Breakout Indicator For MT4

The 2 MA Channel Breakout Indicator For MT4 is a simple but very powerful indicator. It was designed specifically to be used for trading charts from one-hour and above.

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The 2 MA Channel Breakout Indicator For MT4 is mainly used for trading breakout sessions as they happen. A lot of traders have built strategies and trading systems based solely on the premise of breakouts.

These breakout strategies are lucrative for your trading opportunities and it is a short lived trade therefore it does not take up most of your day. Which is a key aspect in trading because not everybody has the luxury to sit in front of a chart the whole day. You have other important things to do like spending time with your family. Besides, even if you had the time to sit in from your trading terminal the whole day it will work against you. The reason being is because over trading does your portfolio more harm than good so I do not encourage it in any case. You will end up donating most of the profit you collect back to the brokers. However, that is a topic for another day.

As the name suggests, the 2 MA Channel Breakout Indicator For MT4 is built using two moving averages; one fast moving average trading at a period of 89. The indicator also comprises of a second moving average which has a higher period of 144 thus being the slower moving average. The higher the moving average period the slower the moving average.  

Let's dive into the finer details of the 2 MA Channel Breakout Indicator For MT4 to see how it functions and how it can be used to collect some pips on a consistent basis.

Consistency is the key to growing your trading portfolio at an exponential rate.

Finer Details

Breakout trading is not new to many traders but let's look at what it is. Breakouts occur after accumulation zones. These zones tend to be narrow. For instance, you may quickly identify them by using the Bollinger Bands indicator. For instance, if the bands of the Bollinger Band indicator are narrow then this means you might find yourself in a narrow sideways trading channel where price could "accelerate" out of that specific zone.

Now the direction of the breakout needs to be decided upon by virtue of a trading system that provides you with an accurate analysis. Sometimes, what can transpire is that the market can "breakout" momentarily and turn right around and go back into its previous narrow channel in preparation for a move in that opposite direction. Then this induces majority of the traders to trade that dummy breakout and be stopped out because they are going in the right direction. This is commonly referred to as a fakeout. The definition thereof lies in the name itself. It is the opposite of  what a breakout is - it is the opposite of a breakout.

These fakeouts happen a lot in the market and many traders get caught by them. Even I have been caught in fakeout move. It happens to all of us. It happened to me frequently back in the day but as I grew in skills and knowledge my trading system has developed to such a degree that it almost completely minimises the risk of getting a breakout trade wrong. But I just would like to point to you that the difference between a fakeout and a breakout is time. They are time sensitive. Meaning that a breakout marks then end of an accumulation zone and a fakeout does not. That is a key difference to remember.

Nonetheless, by using the 2 MA Channel Breakout Indicator For MT4 your chances of getting a breakout trade right are increased.

Breakout Trading Here We Come!

The 2 MA Breakout Indicator For MT4 is mostly used for H1 charts and above. But what if I can use it on the 15-minute charts for my day trades. The reason why I say this is because I mostly trade breakouts on the 15-minute time frame. But it depends on how you use the breakout trading system. In the asian session there is often a narrow trading channel or range that forms. 

You could argue that a breakout trade is the same as the fakeout trade because even if the price retraces rapidly after a breakout you may still profit from that move provided you quickly locked in your profits by moving your stop loss into profit. That way if there is indeed a fakeout then you still win. This is risky because you need a large trading portfolio to go in with big lots because the move is brief with a few pips. In truth that does make sense and this view actually relates quite closely to the way in which I trade breakouts. I prefer this way because it is less risky.

I do not necessarily trade the breakouts as it happens - I trade the breakouts indirectly when the market "hints" to me in which direction it will trend in. This usually happens after the breakout. This way of trading breakouts affords me the opportunity to collect more pips and it is far less risky than trading breakouts in the other way. 

The screenshot was taken, in this instance, when there was a breakout during the Asian session. Price broke out momentarily and "retraced" back into the accumulation zone. The red dot signals a sell breakout trade and the grey dot signals a possible buy breakout trade. That is the essential use-case of the 2 MA Channel Breakout Indicator For MT4. Usually what happens here is that the big banks will enforce a breakout pattern and trigger traders into buying or selling in that direction. In this case, the market broke out to the down side to set the possible low of the day. Then it moved back up and went back to this possible low of the day to form a double-bottom pattern. But as this happens, the traders who are in a short position will now begin to believe that they have made the right direction but the next few red dots show candlesticks with wicks that are elongated to the down side. This shows that there is not enough selling pressure and the market will head in an upward direction for the middle part of the day.

What I liked about this trade setup is that the narrow Asian range traded in the channel of the 2 MA Channel Breakout Indicator For MT4. This behaviour or nature of price movement happens more frequently than you think.

In Closing

The 2 MA Channel Breakout Indicator For MT4 is an excellent indicator for trading breakouts. However, you may use it to trade the after effects of these breakouts displayed by the 2 MA Channel Breakout Indicator. The main objective for doing so is because it offers more pips and it is less risky. This is fantastic because now you have a great way to day trade breakouts courtesy of the 2 MA Channel Breakout Indicator For MT4.

 

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I'm Mike Semlitsch the owner of PerfectTrendSystem.com. My trading career started in 2007. Since 2013 I have helped thousands of traders to take their trading to the next level. Many of them are now constantly profitable traders. 

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