Need your opinion on this breakout strategy

[Codezilla]

I've been doing some research for alternative systems and I would like you guys and gals to let me know if this makes sense and if you think its a good idea.

The Breakout System. I saw it somewhere on the net and it made a bunch of sense to me. Please let me know.

1. Obtain high and low for the lastest closed candle on the 1 hour chart. Let's call this the channel.
2. Go to 5 min chart and enter long or short position when price breaks above or below the channel.
3. For long, set stop loss just below the channel. For short set it just above the channel.
4. Take profit??? What should trigger this? Or should I preset it, scalp it maybe?

You opinion and critiques are welcomed. Thank you soldiers!!!

 

[Pharaoh]

I'd definitely want to add some sort of filters. If the last hour candle was really short and price gets volatile, this could get you into trades both ways and stop you out both ways.

Also, if the last candle was exceptionally tall, then you would have very large stoplosses.

Perhaps an "atypical candle detector" subroutine?

 

[Codezilla]

Good point. What if I figure out the average price range for the last X candles on the 1 hour chart. I guess this could give me an idea of what a typical candle would be for the current market. If the "channel" candle is X% larger or smaller than what the average candle is then adjust the stoploss and take profit to maybe the average range. This is just me thinking out loud. Let me know what you think. Thank you.