Concept Paper-MNQ/NQ Breakout Setup

Basic idea:

The setup is based on the breakout of a sideways phase in a certain time frame. The breakout can be long (rising) or short (falling).

Goal

Automation of a trading process

Platform/software environment

Quantower/ Volume Trader Terminal

Market/Asset

MNQ/NWQ (Nasdaq Futures)

Trading parameters

position size-10 contracts/micro contracts

TakeProfit as a split order (bracket)

10 Ticks: 20%

20 Ticks: 60%

30 Ticks: 20%

StopLoss defaults to 50 ticks

Special feature: if the market runs in TP 20 ticks, move SL to break even to prevent loss.

1m chart (candle chart, 1 minute)

Timeframe Chart

How the algorithm works:

The absolute high and absolute low are determined in the time window from 07:00 CET to 08:00 CET. This creates a so-called range that acts as a base price range.

If the price breaks out of the range short or long with momentum, a fall or rise of the price by 10-30 ticks is expected.

A valid outbreak occurs when:

The previously defined price range is left

By approximately 1-3 ticks (i.e. the low/high previously set between 7 and 8 o'clock) it is exceeded or undercut.

Corresponding buying/selling pressure is evident (i.e. the volume delta is strongly positive or negative) - Example value: If delta is positive/negative at 200 then trade, if below: no trade

Given the above conditions, the algorithm should do the following:

After a breakout, stop at 1-3 ticks above or below the extreme point and then close the positions again in profit according to the above trading parameters (note the special nature of the SL).

The trade should ONLY take place from 08:00 CET, end time. 10:00 CET,  as the relevant price range will be determined beforehand.