WEEKLY Big Box Setup

GBP/USD 4HR 1/29/09

The WEEKLY BIG BOX BREAKOUT SETUP is a different box breakout strategy.  In this strategy the box is the previous week.  As seen in this 4 hour Pound chart the vertical lines separate the weeks.  You can see that the pair paid out 800 pips as it broke out of the last range box.  That is $8,000 on a one lot trade!  In one week!  $800 on a one minilot trade.  With just 2% of your account at risk that is a 16% return on investment with a 100 pip initial stop loss.  If you can squeeze off this trade with a initial 50 pip stop loss you would generate a 32% ROI on this one trade in one week.  Of course this is an exceptional occurrence in normal times.  In these volatile times the Pound moving 800 pips in one week is not so rare. 

Look at how these weekly range boxes have been paying out.  You can see that money management is the most critical component of this type of trading.  Keeping losses minimized, managing to keep from getting stopped out and maximizing the weekly payout is the name of this game.  Looking at the chart you can see that 5 of the last 6 Weekly range boxes paid out if the stops were properly managed.

I will be studying applying and publishing this trading method more as the year progresses.  One payout like this per month even per year is an enormous return on capital investment.

Update 2/8/09: Weekly breakout trades are stronger if they are also multiweek breakouts and monthly breakouts.  This is indicative of new trends setting in.  New multiweek highs and lows are easily spotted. They are trading indicators that many others use and see.  The famous Turtle trading group focused on this type of breakout trading, buying on new 20 day, 4 week highs and exiting on new 10 day lows.  They also used a 2x 20 day Average True Range they called 2N as their stop. The smaller the stop the bigger the trade. Their longer term trade was a 11 week breakout with 20 week exit. Extractred from the Complete Turtle Trader, by Michael Covel.