MagicBreakout.pdf

Tim Trush & Julie Lavrin

introduce

MagicBreakout

Forex Trading Strategy

Your guide to financial freedom.

www.magicbreakout.com

Table Of Contents

Chapter I: Introduction

I.1. Why MagicBreakout ?_____________________________________________________________3

What makes the MagicBreakout strategy different and magic.

I.2. What is really a “breakout”?_______________________________________________________3

Identify “good” breakouts and “false” breakouts. Good breakouts result in nice profits, but false breakouts turn back to

losses. The next paragraph will reveal the secret why false breakouts occur more often and who is responsible for that

phenomenon.

I.3. The secret behind false breakouts___________________________________________________4

Have you heard about the old famous 123-Pattern ? Have you ever tried it? Have you tried to trade breakouts? Forget it.

Let's explain the insider's secret why most traders lose money trying to catch the breakouts. Let's discover the myth.

I.4. Julie comes with a genial solution: Enter the breakout before the crowd!__________________5

This is the heart of the MagicBreakout strategy. Julie has found a tricky way to distinguish between good breakouts and

false breakouts. Moreover, her eyes see a breakout before it happens! “Amazing, I can't believe I'm doing this!”

Chapter II: Entry

II.1. Chart setup____________________________________________________________________6

Prepare your chart.

II.2. Entry rule______________________________________________________________________7

Enter the market only when your system tells you. Emotionless trading.

II.3 Practical implementation_________________________________________________________9

Recognize a valid entry step by step.

Chapter III: Exit

III.1. Chart setup___________________________________________________________________11

Prepare your chart.

III.2. Exit rule_____________________________________________________________________12

Remember: Exit is much more important than entry! Knowing when it is time to exit the market is a very important task.

Some traders get out too early of a winning trade because they do not follow a given system. Some traders enter the market

and then they nervously watch the chart and ask themselves: “Should I close the position now... or NOW?!”. Their emotions

control their trading and they consistently lose money. Remember, it is a discipline that separates winners from losers.

Chapter IV: Maximize your profits and achieve exponential earnings

__________________________________________________________________________________13

If you strictly follow the money management rules, it is a very easy task to become a Forex millionaire in a relatively short

time. Can't believe? Let us show you the math.

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Chapter I: Introduction

I.1. Why MagicBreakout ?

● Enter the market before the crowd.

With this strategy you will be able to predict breakouts before the momentum traders arrive.

● MagicBreakout is a conservative trading strategy

It's safe. You risk a small amount of money on every trade.

● Mechanical.

Trade by following a set of simple rules.

● Easy to implement.

Convince yourself that trading is really easy!

● Profitable.

If you stick to the rules and go through a series of losing trades, you will finally become

profitable.

● Scalable.

Our MagicBreakout strategy has become a key of the top traders.

An improved MagicBreakout+ strategy can make +67% in one month.

Our student made 5400% in one year using his own exit rules.

I.2. What is really a “breakout”?

A breakout occurs when the price breaks a significant high and makes a new high. This is the

definition. Let's give an example.

Another breakout occurs when the price breaks a significant low and makes a new low .

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It looks simple. Most traders are trying to catch these breakouts and to make money on the accelerated

price move. A so-called momentum trader places his buy-stop order just above the significant high. He

is waiting for this high breakout. If the breakout didn't happen, he cancels his buy-stop order and

prepares for the next trade. If the breakout happens and his buy-stop target is filled, his trading platform

automatically opens a long position. The same holds for a low breakout (in that case, trader would

place a sell-stop order). Why traders are doing that? Because the price action typically accelerates after

a breakout and results in a nice profit. But it's not so sweet every time. There is a risk of significant

loss. The nightmares of momentum traders are “false breakouts” and they often happen. Let's explain

why .

Good breakout

False breakout

I.3. The secret behind false breakouts

Let's discuss the false high-breakouts (the same holds for low-breakouts). There are times when price

breaks a significant high, a buy order is filled, long position is opened, but the price quickly turns back

down and never comes up or stoploss is filled. The trader has to exit position with a loss. Small losses

are not something unusual. Every professional trader has losses in Forex trading, you have to admit it.

But a profitable trader wins more than loses after time. We have tested some breakout systems on all

major currency pairs ten years back. Most of the breakouts were false breakouts or resulted in a small

profit. Any system that relies purely on breakouts does not work consistently. Since we, Tim and Julie,

are in the financial markets for more than ten years, we have collected some sort of information the

large banks and corporations do not want you to know.

A large bank has enough money to move the market for a while. When the price hits the

significant high again, it should normally bounce back from this high forming a double top pattern. But

momentum traders would go long when a breakout happens - it is a well known practice explained in

previous paragraph. When the price comes near the high, traders inside the bank quickly buy a large

volume of one currency pair ($ millions!). They move the market a few pips up and a forced breakout

happens! There is a bunch of buy-orders lying just above the high and these orders get filled

immediately. Then the market moves some additional pips up because of new long positions. Then the

bank happily closes it's own large position (sells the millions back) and the price quickly turns back.

The banks “earn” great amount of money doing this unfair business. They do it a few times every day...

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I.4. Julie comes with a genial solution: Enter the breakout before the crowd!

Julie experimented with the CCI indicator (Commodity Channel Index) in the Forex market years ago .

There are generally two lines: +100 line and -100 line on the indicator. When CCI crosses (or “breaks”)

the 100 line upward, it is a good entry signal to go long. When CCI crosses (or “breaks”) the -100 line

downward, it is a good entry signal to go short.

Good signal means that the probability of winning dramatically increases. In other words –

CCI indicator acts like a filter for spotting winning trades. Not only a filter. It gives an opportunity to

enter the market before a breakout! There was a hard work in developing a definite profitable strategy

based on this knowledge. Our strategy is easy to use and gives impressive results. With our students,

we made a fortune in the years 2006 and 2007 starting with less than one thousand dollars. We will

give our knowledge to you in the next chapters.

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