Description: A simple break out trading system
Price range: Free
Ease of use
Janna FX is an online YouTube channel with about 30k subscribers, started in 2013 by a Forex trader and educator called JannaFX. JanneFX is born in Russia, moved to the UK, and she is currently travelling the world while trading part-time. Having 15 years of trading experience, she trades the Forex markets with one single strategy: break out trading.
- Free Strategy
- Simple to learn and to trade
- High strike rate (many winners)
- Negative Reward/Risk ratio
- Big losers
- Risky auto recovery option in EA
The strategy is old-fashioned break out trading from price consolidation patterns like triangles, wedges, flags and pennants and such. It is very easy to learn and to trade and it is 100% based on price action, so no indicators.
The strategy can be traded ‘part-time’ (as JannaFX calls it), and you don’t need to be at the screen all day.
Janna trades the strategy on the EURUSD, AUDUSD, USDCAD, AUDUSD, USDJPY, EURGBP, GBPJPY and Gold, but the system can be traded on every pair, even bitcoin, as long as consolidation patterns can be identified.
Execution of the strategy
The execution of the strategy is simple. At the weekends the charts are being analyzed, and support, resistance, channel and trend lines are drawn on the weekly, daily and hourly charts.
After this is done, the preferred places for consolidation patterns, triangles, flags, pennants etc to form in the week to come are marked on the charts
If price reaches these marked areas and consolidates as desired, then pending orders are placed on both sides of the patterns at a 20 pips distance. If an order gets triggered then part of the position is closed after 10 pips, and the SL of the remaining position is moved to BE, and is trailed afterwards
The Line Trader EA
The sytem is traded manually, but JannaFX sells a Line Trader EA to trade the system semi-automatically. The fee for it is currently a $20 dollar monthly.
I have never used this EA, so I cannot include it in the review. But I have built such an EA myself which I have used in the JannaFX profit test. Based on these experiences, I can tell that the EA makes trading easier and it saves time. But you don’t need it.
The good about the strategy
The big advantage of this system is its simplicity. It is very easy to learn, and it can be a perfect starter strategy for Forex newbies for this reason.
The system comes with free live strategy demonstration in weekly YouTube videos, which is rather exceptional for free trading strategies.
Another good thing is that the strategy produces a lot of quick winners, which is always nice to have, especially when you are a beginner.
JannaFX regularly shows a track record in her videos, as shown below. It is very uncommon that Forex educators are open about their own performance, so this is a big plus. (Smart Forex Learning is the only other reviewed course that provides a track record.)
A drawback of the strategy is the negative reward/risk of the setups. In her videos JannaFX repeatedly notes that her strategy ‘only has winners’, which is indeed the case, but that is also a little misleading.
A good reward to risk is equally important as a good strike rate, and for this strategy it is such, that for each loser you need to have a 5-10 winners to recover (!).
In order to prevent these losers, JannaFX sometimes trades without a stop loss, as she has said in one of here videos. She just lets the trades float until they hit their profit targets, which can take weeks or even months. This trading style can be profitable for a period, but one big world event is enough to make the markets go crazy, and to blow your entire account in a matter of minutes. So I don’t like it.
Auto recovery function
Same story applies to the so-called auto recovery function of the Line Trader EA. It opens trades in the other direction after a trade is stopped out, in order to recover quickly from its loss. It is based on the risky martingale principle and it will be successful for a time. But again, just one black day is needed to blow your entire account with it.
I think the only safe alternative to deal with the big losers of this system is to simply adjust the strategy’s ruleset: Reduce the stop loss size to get a better reward/risk ratio. You will get less winners, but better: also less big losers.
About the ‘ease of use’ of this strategy
As already said before, the system is very easy to trade. Paper trading this strategy in Metatrader 4 is very easy as well.
TEST: Is the strategy profitable?
I have tested the strategy for 4 months. The results are shown below. After 4 months of steady winning, all profits were wiped away again in 1 single day. A little as expected.
The JannaFX Break Out strategy is a free trading system that is very easy to learn and to trade. It has a lot of winners, and that’s what so appealing of this strategy. But appearances can be deceptive.
Due to the negative reward/risk ratio, you only need 3 losers to wipe away months of profits.
But the strategy can be learned for free. And because it provides free live strategy demonstration as well, it is an excellent starter strategy for newbies in Forex trading.