Have you all found a reasonable way to use the breakout indicator I shared in the previous post? Let me show you a simple way to use it: if there is an upward breakout, place a long order; if there is a downward breakout, place a short order. In the image, the last white candle appears with a green arrow, indicating that the candle has broken out of the previous swing high. Place a market entry order immediately, with a stop loss at the bottom of the candle, and a take profit equal to three times the stop loss distance, meaning RR=3.
It is recommended to use this on the H4 or D timeframe for better results than smaller timeframes.
The results are sweet, however there are many instances where it also fails.
To be objective, I have backtested this strategy with BTC to provide an objective viewpoint for you all. The backtest results show 520 trades executed, with a capital of 100,962,627,944.76 for spot trading (or 10,000 for futures using 10x leverage), resulting in a profit of 47.84%, with a maximum drawdown of 22.44%, and a win rate of 33.85%. This means that out of 100 trades, 33 trades were profitable while the remaining 67 hit the stop loss. These are typical parameters of the Follow Trend method. The win percentage is low, but the results are still profitable due to the large RR.
When changing input parameters such as RR, for example, with RR=2, the win rate increases to 37.93% but the profit decreases to 25.97%, and the maximum drawdown increases to 24.89%. Changing the trading timeframes such as M15, H1, H4, D... will also yield different results.
Therefore, backtesting with various parameters will help us find the most suitable timeframe and optimal RR.
But then again... it seems too good to be true :)) In reality, the market has a different lock for each phase; just because we have the optimal key does not mean it is optimal for the current lock.
Let's continue this part next time.
To find the indicator, you can go to the tradingview chart, in the indicator section type Breakout Swing High Low to find it.
