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1st hour breakout based on a five minute chart
This system works on the basis that the first hour of trading sets the tone for the rest of the trading day.
Any movement outside of the first hours trading will signal a breakout in that direction.
The prices should move in the direction of the breakout an amount equal to the range of the first hours trading.
A stop loss is set in the opposite direction also equal to the first hours trading range. you should not keep any positions over night.
You should exit at the end of the day if neither your stops or limits gets hit.
Please click on chart below for larger image
This system is a very simple one to follow .
However, like any other system it's best used with good money management.
I have modified this system to suit my style of trading. I tend to ignore the first 5 mins of the trading day unless theres a big tail to it. If its only a body then i would ignore the low from it. I would then wait for the price to move higher and then wait for the price to correct and once theres a candle with a tail i would use that as a possible low ,obviously if the price then goes lower within the first hour of trading then i would have to adjust the level for the low.I also look for a tail on the high as well.
I will also leave a trade if the range on the first hour is more than 40 points as the higher the range the more likely of a trade messing up. Ideal range is from 10-30 points in the first hour. If there is a large range in the first hour its best Not to open a trade for the day and come back the following day.
see example below
