Trend Following Breakout

This trading strategy involves entering long positions when the price crosses over the highest high of a set number of bars (entry) and closes the position when it crosses over the lowest high of a smaller set number of bars (exit). Short positions are entered when the price crosses under the lowest low of the entry period and closed when it crosses under the highest low of the exit period.

To trade this strategy manually on TradingView:

• Set up two horizontal lines on your chart, one for the long entry (highest high) and one for the short entry (lowest low), each based on the last 'entry' number of bars.
• Add two more lines for your exit signals: one for the long exit (lowest high) based on the last 'exit' number of bars, and one for the short exit (highest low) also over the last 'exit' number of bars.
• For a long entry, take action when the price closes above your long entry line. For a short entry, act when the price closes below your short entry line.
• Stay in the trade until the exit condition is met: for longs, this is a close above the long exit line; for shorts, a close below the short exit line.
• Maintain awareness of the backtest period: your manual trades should closely represent those inside the programmed window period for consistency.

To enhance the Trend Following Breakout strategy through manual trading, we can focus on a few critical areas such as optimization of entry/exit parameters, incorporation of volume analysis, and the utilization of additional technical indicators for improved signal confirmation. The objective is to refine the strategy's performance, minimize false breakouts, and increase the probability of successful trades.

• Optimization of Entry/Exit Parameters: Experiment with different lengths for the entry and exit periods. The script uses an 'entry' value of 100 bars and an 'exit' value of 50 bars. Manual adjustment and backtesting should be conducted to determine if these numbers are optimal for your trading symbol and timeframe. It may be that a smaller number of bars for entries and exits could produce more timely signals, leading to better entries and prevent holding onto positions during trend reversals.
• Incorporation of Volume Analysis: Analyze volume in conjunction with price action. Breakouts on high volume are generally more reliable than those on low volume. Therefore, introducing a volume filter could enhance the strategy. One might require that for a trade signal to be valid, it must be accompanied by a simultaneous increase in volume above a certain threshold.
• Technical Indicators for Signal Confirmation: Adding additional technical indicators to the strategy can also provide stronger signal confirmations. For instance, the Relative Strength Index (RSI) can be used to identify overbought or oversold conditions before entering a trade. A breakout with an RSI reading above 70 might be considered overextended, while one with an RSI below 30 may indicate the potential for a strong upward move. Another tool is the Moving Average Convergence Divergence (MACD) to gauge the momentum behind a price move, helping to avoid false breakouts.
• Identify and Factor in Major Support/Resistance Levels: Support and resistance levels can significantly impact the behavior of price after a breakout. By identifying these levels on longer timeframes and adjusting entries to avoid trades close to such barriers, the strategy can avoid potential traps where price fails to continue in the breakout direction.
• Adapt Strategy for Different Market Conditions: Markets are dynamic, and conditions change. It is advisable to adapt the strategy depending on whether the market is trending, ranging, or experiencing high volatility. In ranging markets, for instance, tighter stops could be employed to protect against breaks from the range that fail to establish a new trend.

This breakout strategy is tailored for traders who prefer a trend-following approach and feel comfortable with holding positions for several hours to days, making it particularly suitable for swing and position traders. It's designed for those who have an affinity for technical analysis and are adept at interpreting chart patterns and price action. Traders of cryptocurrencies such as Bitcoin and Ethereum will find it especially useful given its proven effectiveness with these assets on longer timeframes like 4-hourly (4H) and daily (1D) charts.

• Swing and Position Traders: Ideal for those looking for medium to long-term trades and can capitalise on the significant movements during such intervals.
• Technical Analysis Enthusiasts: Suited to traders who base their decisions on chart patterns and indicators.
• Cryptocurrency Traders: Optimized settings for $BTC and $ETH mean those focusing on these markets may benefit from this strategy.

• Nature of Strategy: A momentum-based approach that capitalizes on breakouts from the highs and lows of a set number of bars.
• Working Principle: Enters long when price crosses over a prior high, short when under a prior low, with exits opposite to entries.
• Automation: Implemented via a TradingView script with alerting for entry/exit points, ideal for those comfortable with technology.
• Manual Trading: Utilize horizontal lines to mark entry/exit levels determined by high/low points from a specified number of bars for precise control.
• Optimization: Adjust entry/exit parameters, incorporate volume and other technical indicators like RSI and MACD for stronger signals.
• Trader Profile: Best for swing/position traders, technical analysis followers, particularly those trading $BTC and $ETH on 4H and 1D charts.
• Managing Risk: Integrate support/resistance levels and adapt to varying market conditions for enhanced risk control.