How to Avoid False Breakouts (My Secret Technique)
Loses money
No edge after realistic trading costs
- trades tested
- 3,116
- per trade after costs
- -5.76bp
- winners
- 35%
- years of data
- 4.9
Mark a consolidation's support and resistance (any breakout pattern) and only take the breakout on a momentum candle: one big-bodied candle with most of its body beyond the line, or three green (red) candles outside the line; enter at the close of the momentum candle with the stop just beyond the broken level. Sell half at 1.5R, move the stop to that 1.5R mark, and exit the rest when the Chandelier Stop (ATR multiplier 2) flips.
The exact rules we tested
- 01Instrument: ETHUSDT | Signal timeframe: 15m | Direction: both
- 02LONG when: ((close crosses above res) AND (body_up > atr14) AND (body_mid > res)) OR ((bs_l = 2) AND ([(close > open) AND (close > lvl_l)] on each of the last 3 bars))
- 03SHORT when: ((close crosses below sup) AND (body_dn > atr14) AND (body_mid < sup)) OR ((bs_s = 2) AND ([(close < open) AND (close < lvl_s)] on each of the last 3 bars))
- 04Entry: market at the signal bar's close
- 05Stop: at the lvl_l (longs) / lvl_s (shorts) level
- 06Take 50% off at +1.5R, stop to breakeven, let the rest run
- 07Chandelier stop: highest high (longs) / lowest low (shorts) since entry minus 2 x ATR(22)
- 08Entry fills at the signal bar's close (market-on-close)
- 09Where body_up = close minus open
- 10Where body_dn = open minus close
- 11Where body_sum = open plus close
- 12Where body_mid = body_sum times 0.5
- 13Where lvl_l = res frozen at the last bar when close crosses above res
- 14Where lvl_s = sup frozen at the last bar when close crosses below sup