Simple Breakout Tool
Build a simple trading indicator that lets you identify breakouts before they happen, where you have enough of an edge to give you an entry.
Welcome to the eighth episode of “How to Thinkscript”. We are TOSIndicators.com, home of the Volatility Box, the most robust ThinkOrSwim indicator based on statistical models built for large institutions and hedge funds.
In today’s video, we’re going to show you how to build a tool that lets you identify breakouts before they happen, where you have enough of an edge to give you an entry.
The Simple Breakout Tool is comparable to other paid indicators that sell for upwards of $297.
We’ll show you how to build it, in under an hour, for free.
If you’d like to skip the tutorial and start playing with the indicator right away, you can download the Simple Breakout Tool for free below.
Goal of the Indicator
Using the Simple Breakout Tool, we'd like to:
Identify breakouts early enough, that there is enough of an edge to still participate in the bulk of the move.
And we have three rules we want to follow as we try and build this indicator:
- Keep it simple – less is more
- Prefer fewer entries, but better P/L
- Clear signal to enter a trade
Our Three Inputs
We have 3 inputs to help us power the Simple Breakout Indicator (really, 3 different sets of very common indicators that we'll look at using a very particular permutation).
- Simple Moving Averages
10, 30 and 100-period SMA’s, cross above the 10 will be our trigger
We’ll use Stochastic Slow, with a 21,3 setting
- MACD Histogram
Bullish should be >0 and bearish <0
Practical Application (Real Trade Scenarios)
In our tutorial video, we also talk about how to use the V-Score and and Market Pulse indicators, alongside the Simple Breakout Tool to help you create a very clear, and well-defined trade plan.
Click the button below to download the Simple Breakout Tool