SDX Breakout Trading System For MT4
The SDX Breakout Trading System For MT4 represents a London Session breakout trading strategy that works for both scalping and intraday trading purposes.
This MT4 trading system applies SDX 8H levels for finding the key breakout areas of the price during the London Session. Besides, it includes trend channels, signal arrows, RSI HistoAlert, and a unique version of the divergence signal indicator for greater accuracy of its trade signals.
SDX Breakout Trading System for MT4 supports trading all kinds of major forex currency pairs listed in the financial markets. Furthermore, this system works well when applied for 30-minutes to hourly charts within the MT trading platform.
Besides the breakout trade setups, this system also identifies both trend-following and trend-reversal trade signals. It demonstrates the trade setups in an uncomplicated manner so that everybody can read and be benefited from its effective trade signals.
After reading this article, you’ll understand how to apply the SDX Breakout Trading System for MT4 in the live markets. Besides, our chart examples with explanations will guide you through different methods of applying this versatile trading system for enhancing your trading performance.
SDX Breakout Trading System For MT4 - Overview
- SDX-8H Levels: The SDX-8H levels shows you the highs and lows of the current market range using its yellow horizontal levels. These levels are considered as an ideal place to determine the price breakouts, especially during the London Sessions.
Furthermore, this indicator also identifies the short-range movement of the price by plotting horizontal support and resistance channel. These levels help you to determine the possible direction of the upcoming breakout opportunities.
For example, the price breaks above the blue resistance level signals for a possibility of price breakouts above the session high(yellow resistance line) too. In such a case, we’ll only aim for a buy entry following the expected bullish breakout above the resistance line.
Besides identifying the market entry levels, this indicator also helps traders to determine the key trade-exit areas in the market.
- SHI Channel MTF: This indicator plots a trendline channel drawn based on the highs and lows of the current market trend. The direction of the channel (up or downwards) also tells you about the trend conditions of the market.
The higher line of the channel appears by connecting the highs of the market trend. This level represents the dynamic resistance line of market trends. On the other hand, the lower line of the channel is plotted by connecting the lows of the market and works as a dynamic resistance level of the trend.
The price breaks out of this channel signals for a possible trend reversal. Such breakouts offer good trading opportunities for the swing traders.
According to our strategy, we’ll aim to buy when the price finds support at the lower line of the channel. Oppositely, we’ll go for the sell entries when the price rejects to move above the higher resistance line of the channel.
For a better understanding, this indicator also plots arrow signals whenever the price rejects any of its levels.
- RSI HistoAlert: This RSI alert indicator directly signals for the trend conditions of the market by using its histogram bars. The RSI value above 10 represents the bullish trend of the market. Contrarily, the value drops below -10 when the trend turns bearish.
If you find the RSI value roaming in between +10 and -10 level then consider the market is in a neutral trend. We’ll ignore the trade signals in such particular periods to avoid the weak trade setups.
- FX5 Divergence V2.1: This is a unique trend-reversal indicator that signals for the possible divergence of the price movements.
FX5 Divergence V2.1 continuously monitors the price-action changes for identifying the key trend-reversal areas of the market. It uses its histogram bars to show the current MACD value that signals the current direction of the market momentum too. The value of the indicator is determined based on a 12-period fast EMA, 26-period slow EMA, and a 9-period signal SMA.
It signals for a possible divergence of the market trends when the price movement behaves quite opposite to the changes in the indicator value.
For example, the price makes a higher high but the FX5 Divergence histogram bars plot lower high signals for a bearish divergence of the market trend. In such a case, we’ll look for the sell opportunities only.
Fortunately, you don’t need to remember the divergence rule when you’re using the FX5 Divergence V2.1. It automatically matches the market highs and lows with its current change in value and plots the divergence signals. It shows the divergence by using an arrow signal that points to the possible direction of the next market trend.
Trade setups using the SDX Breakout Trading System For MT4
In this chart example, the price initially made a false break at the bottom line of the SHI Channel MTF. It means the price is treating the trendline level as support. At the same time, the RSI HistoAlert and the FX5 Divergence value also turn positive. After we have all these confirmations, we activated our long entry when the price breaks above the current SDX-8H range.
If you’re using the trend channel to go long then set the stop loss limit below its lower trendline. Otherwise, use the range high/low of SDX-8H(the yellow horizontal level) for determining the stop loss level.
In this example, we’ve decided to make a profit by closing our buy order once an arrow signal confirms a price rejection at the upper trendline of the price channel.
This is a 15-minute GBPUSD chart showing how to trade the divergences in a shorter timeframe chart. In this example, the FX5 Divergence applied its divergence line that detects the market is making a lower high while the indicator bar closes making a higher high.
At the same time, the indicator plots a red arrow above its bars signaling for a bearish divergence of the market trend. We consider this as an early signal for a possible bearish move of the price.
So, we set a pending sell order right below the session low with a stop loss above the session high. Later, the price breaks below the session low and activates our sell entry. At the same moment, the RSI and the FX5 Divergence values also turn negative by supporting the bearish breakout.
Close the sell order once a rejection arrow appears below the SDX-8H support level. Alternatively, you can exit a sell order when both the RSi and Fx5 Divergence turns positive at the same moment.
Download the complete system description and the files here: