Trendline Demark Breakout system For MT4
Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.
The Trendline Demark Breakout system For MT4 represents one of the simplest forex breakout trading strategies you may have seen until now.
Breakout trading is a famous trading method. However, the market often doesn’t react in the same way as we expect. Breakout traders often experience false-break traps (which means the price reverses back again after the breakout) that end up hitting the stop-loss limits. As a result, each breakout trade entry involves a significant amount of risks as well.
The Trendline Demark Breakout System for MT4 tries to help you improve your breakout trading. The system plots the breakout trade setups within the direction of the trend of the market.
The system applies the BBands Stop indicator to the chart, which helps you identifying the trend of the market. In additon, its DMark breakout levels help traders to find the key breakout areas of the price. Its method of trading the breakouts from the right place and within the correct trend direction is the key factor behind a good approach of breakout trading.
Of course, as you probably know, the skills of the trader are the most important factor for success in trading. A good system alone does not make you profitable. You need to improve your skills accordingly.
According to the inventor, this breakout trading system can be used on all kinds of forex currency pairs available in the financial markets and on any time frame. But please always have an eye on the spread (the costs of opening/closing a position) which should be preferable low. Especially on lower time frames you should only trade instruments with a small spread.
After reading this guide you’ll have learned how to apply the Trendline Demark Breakout System for MT4 in the live markets.
Trendline Demark Breakout system For MT4 - Overview
- BBands Stop: This system uses the BBands Stops level as dynamic trend lines. Every time the price breaks the levels of the BBands Stop then this signals a trend-reversal condition of the market. This indicator uses a 48-period special moving average to calculate the levels.
If the moving average turns blue then the line acts as a dynamic support and the trend is interpreted as an upward trend. Contrarily, if it turns red then it works as a resistance and the trend is seen as a downward trend.
For a better understanding, it uses signal arrows which are either pointing upwards or downwards.
Since the BBands Stop works as a dynamic trend line, you can also use its level to determine the trailing stop levels of the trade entries.
- DMark Fractals: DMark Fractals plots fractal dots around the price bars whenever the price intends to make a u-turn against its current movement.
In this strategy, we use the DMark Fractal as a supportive signal for picking the right direction of the price-breakouts.
For example, the price breaks below the lower BBands Stop level. At the same time, the DMark Fractal dot appears above the high of the price bar. It means that the price can dive downwards. - DMark Breakouts: This indicator automatically connects the swing highs and lows of the trend formation on the chart by drawing lines. The lines are forming triangle formations which can be used to detect breakouts. Such lines are also called DMark Breakout levels.
The blue line of the triangle is considered as the resistance and the red line as the breakout support of the breakout levels. You’ll also find horizontal levels above and below the triangle. These levels represent the possible target levels of the price following each price breakout of the triangle.
Regular Breakout Trade Setups Using The Trendline Demark Breakout system For MT4
Buy Setup:
This is a 1-hour EURUSD chart which shows a buy trade setup according to the rules. This setup lead to a bullish trend-reversal of the market.
In this chart example, the EURUSD was in a bearish trend since the price remained below the BB Stop level. Later, the price rebounded from the DMark support level and started to move upwards.
At one point, the price breaks above the BBands Stop level. The indicator plots a blue arrow and a blue BBands Stop level below the price bars signaling for a bullish trend-reversal of the market. In addition, a DMark Fractal dot appears below the price-level at the same time which confirms the current bullish breakout.
Therefore, we trigger a buy order at the break of the higher BBands Stop level. You can place the stop loss order below the current BBands Stop (blue) level. In this example, we’ve decided to exit the long order with a 2R profit compared to our budgeted risk. Alternatively, you can also close the order after the BBands Stop turns red and appears above the price bars.
Sell Setup:
In this chart example, we’ve applied the system to the 1-hour chart of GBPUSD. The screenshot shows a valid breakout sell setup identified by our trend-following breakout system.
At the initial stage, the market was in a ranging situation since the price was moving flat. In addition, you can see several DMark Fract dots appeared on both sides of the price bars indicating the market is ranging for a while.
After the price breaks below the blue BBands Stop level, the system plots a red arrow above the price candle confirming the current trend as bearish. So, we activate our sell order immediately after the price attempts to break below the current price range. Set the stop loss limit above the new red BBands Stop level.
According to the trading rules of the system, we exit the sell order once the price breaks above the current BBands Stop level with a blue arrow below the price bar.
Triangle Breakout Trade Setups Using The Trendline Demark Breakout system For MT4
In this 1-hour EURUSD chart, the DMark breakout levels connect the swing highs and lows of the price to form a triangle breakout setup. These levels work as the trend lines of the triangle. Therefore, we’ll trigger an order depending on the breakout direction out of the triangle levels.
You can set a pending buy order above the triangle resistance and a sell order below its support level. Alternatively, we can wait until the price breaks the DMark breakout levels including further confirmations of the market trend.
In this example, the price breaks above the higher DMark Breakout level at one point. It also breaks the resistance trend line of the BBands Stop which signals the bullish-trend reversal of the market. Later the system plots the DMark Fractals dots and a blue signal arrow below the price level which confirms the validity of the current bullish breakout.
After receiving all the above confirmation, we trigger the buy order right above the resistance trend line of the triangle. We can set the stop loss limit below the lower DMark Breakout level (red) that works as a support line of the triangle.
The blue horizontal line above the triangle is the possible destination of the buy trade. This system automatically plots these target levels based on the level of market-volatility while the price was inside the triangle-area.
As per the triangle breakout conditions of the system, we exit the buy order when the price hits the horizontal profit target level(blue).
Please note: We suggest to trade a new trading system on a demo account for at least a few weeks. This will help you to learn the system without risk of losing money. Later you can switch to a real money account.
Download the complete system description and the files here:
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