STLM Breakout Trading System For MT4
The STLM Breakout Trading System For MT4 offers a noise-free trading strategy for the newbie breakout traders who vastly depend on price action signals at key market levels for entering the trades.
Breakout trading is always exciting because it offers quick profits within the shortest time possible. However, such a trading approach gets even more challenging when you attempt to trade the price breakouts in shorter timeframes. There is a myth in the financial market saying that ‘short-term breakout trading strategy only suits the experienced professionals’. Such thoughts were established based on the uncertainty and psychological pressure of the breakout tradings that becomes too hard to handle by novice investors.
The developer of this strategy has combined only a few simple trading indicators to build a reliable breakout trading system that suits both beginners and experienced traders. The SDX-Zone Breakout indicator of this system highlights the key market ranges to help you in determining the possible price breakout levels. On the other hand, the STLM Histogram works on defining the market momentums. This indicator makes sure that you’re trading within the correct momentum of the price.
This system also includes the FiboPiv V2 that shows both the market pivots and the Fibonacci retracements levels of the price. We’ll use both pivots and Fibo-levels for deciding the trade exit levels. You can also use the FiboPiv line as the breakout levels when it appears close to the SDX-Zone Breakout levels.
Please note that the STLM Breakout Trading System works as a forex scalping strategy and suits the 5 and 15-minute timeframes. Also, we recommend you make the major forex currency pairs your best priority while trading with this system in live markets.
Overview of The STLM Breakout Trading System For MT4
- SDX-Zone Breakout: This indicator plots two parallelly distant levels for highlighting the recent highs and lows of the market following the current price movement.
The higher SDX-Zone represents the current market resistance and the lower level outlines the current market support. Once the price decides to come out of the SDX-Zone, we consider it as a possible price breakout.
For a breakout buy, wait until the price breaks the higher SDX-Zone. You might look for a solid bullish candle or a bullish pin bar closed above the resistance as a greater confirmation of the bullish price breakout. In such a case, we’ll place the stop-loss level below the current support zone.
Once the price breaks below the lower SDX-Zone, we consider it as a bearish breakout. During a bearish price breakout, we’ll look for a large bearish candle or solid bearish pin bar below the support as a sell confirmation. While you’re on a short-entry, set the SL limit above the higher resistance plott3ed by the indicator.
Please note that we’ll not trigger any fresh orders until the price remains inside the SDX-Zone Breakout levels.
- FiboPiv V2: This indicator plots powerful and strong support/resistance areas of the market. Whenever the price gets closers to the FiboPiv levels, you need to check the price action signals to assess how the price is treating these levels.
Sometimes you’ll find both FiboPiv and SDX-Zone Breakout levels are plotted at the same place. In such a case you may consider the S/R levels as strong price breakout levels.
In this system, we’re using the Fibo and Pivot SRs to anticipate the projected targets of the trade entries. For example, we’ll exit a long-entry whenever the price fails the breaks above a FiboPiv resistance. Oppositely, exit short when the price denies moving below FiboPiv support.
The minimum risk to reward the target of the STLM Breakout Trading system is 1:1. Therefore, before activating an order, check the probability of at least 1R profit by measuring the distance between your trade entry and FiboPiv targets.
- STLM Histogram: The STLM Histogram is a momentum indicator for MT4 platforms. It smooths out the price data of the last 300 bars and transforms them into useful momentum signals for forecasting the direction of the upcoming market movement.
Its histogram bar shows up above the zero lines and turns into a blue color when the momentum is bullish. A rising pattern of the STLM bars reflects a greater strength of the current bullish momentum.
For bearish momentum signals, the indicator bars need to be plotted below the zero-line and should be turned into a white color at the same time. In such conditions, a larger white bar represents a strong bearish momentum signal.
Besides the strength, it also signals the weakness of the market momentums. For example, the indicator bars switch from blue to white while being above the zero line means the current bullish momentum is losing its current strength. On the other hand, the STLM bars turn blue while being plotted below the zero-line represents the weakness of the current bearish momentum.
Buy Conditions of The STLM Breakout Trading System For MT4
- The price breaks above the SDX-Zone Breakout resistance
- The price also breaks the FiboPiv resistance and treats the levels as support after the bullish breakout
- STLM Histogram bars turn blue and appear above the zero line
Buy Setup of The STLM Breakout Trading System For MT4
In this buy setup, the USDJPY was initially supported by the lower SDX-Zone Breakout level. Later, the price also breaks above the FiboPiv resistance situated at the middle of the SDX-Zone.
Following the bullish breakout at the FiboPiv level, the price approaches the higher SDX-Zone Breakout resistance at 103.86. Meanwhile, the STML Histogram plots blue bars above the zero line to confirm the bullish momentum of the price. Besides, the STML bars were gradually rising from their neutral level which indicates the strength of the current bullish momentum.
Therefore, once the price breaks above the SDX-Zone Breakout level, we activate a buy order at 103.88. For greater safety place the SL limit below the lower SDX-Zone level at 103.60 (28 Pips).
As we can see, the price makes a significant bullish move to the north after plotting the bullish crossover at the key market level. At a point, the USDJPY got resisted at the next SDX-Zone and FiboPiv resistance at 104.36. Considering this rejection as a buy-exit signal, we close our order at 103.34 with a 46 pips profit.
Sell Conditions of The STLM Breakout Trading System For MT4
- The price breaks below the SDX-Zone Breakout support
- The price also breaks the FiboPiv support and treats the levels as resistance after the bearish breakout
- STLM Histogram bars turn white and appear below the zero line
Sell Setup of The STLM Breakout Trading System For MT4
According to this short-term sell setup, the GBPUSD was roaming inside a definite range outlined by the SDX-Zone. Whenever the price starts coiling inside such a short-range it ends up with a price breakout most of the time.
During this ranging period of the price, the STLM Histogram value turns negative and plots white bars below the zero-line. Considering it as a bearish momentum signal, we target a sell order following a possible upcoming bearish price-breakout.
After a while, the price fills our expectation by breaking below the SDX-Zone Breakout support and plots a bearish breakout. Meanwhile, the STLM Histogram plots larger white candles showing a strong bearish momentum signal. So, following the price-breakout, we trigger a GBPUSD sell order at 1.3658. Also, we place the SL above the SDX-Zone resistance at 1.3706 (48 pips).
Following the bearish breakout at the SDX-Zone Breakout level, the price falls straight downwards until it reaches the next market support. At a stage, the price hits the FiboPiv support at 1.3547 and gets rejected from the level by the buyers. Considering it as a bullish rejection, we exit the sell order at 1.3562 with a 96 pips profit.
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