Trading systems
Breakout systems: trade the moment a range gives way
Every breakout system starts from the same observation: price spends most of its life inside a range, and the moment it leaves one, something has changed about who is willing to transact. The disagreement between these nine is entirely about what counts as leaving — a new 20-day high, a close outside a volatility band, the top of a box or of the first half hour of the session — and about which ranges are worth watching at all, which is where Crabel's finding that narrow ranges precede wide ones comes in.
The claim it rests on
The boundary of a range is where the largest cluster of resting orders sits, so the move that clears it tends to keep going rather than stop.
Systems in this style
9 systems
- BreakoutBeginnerMechanical
Donchian Channel Breakout
Richard Donchian
Buy when price makes a new four-week high, sell when it makes a new four-week low, and do nothing else.
- Holding period
- Weeks to months
- Time needed
- 10 minutes a day
- BreakoutIntermediateMechanical
Turtle Trading Breakout
Richard Dennis & William Eckhardt; documented by Curtis Faith
Buy when price makes a new 20-day high, size the position from recent volatility, add to it while it works, and leave on a 10-day low.
- Holding period
- Weeks to months
- Time needed
- 15 minutes after the close
- BreakoutIntermediateMechanical
Keltner Channel Breakout
Chester Keltner, modernised by Linda Raschke
Draw a moving average with bands set by recent volatility, and trade closes outside the bands in the direction the average is already pointing.
- Holding period
- Days to weeks
- Time needed
- 20 minutes a day
- BreakoutIntermediateMechanical
Bollinger Band Squeeze Breakout
John Bollinger
Wait until the bands compress to the narrowest they have been in months, then trade whichever direction price breaks out of the compression.
- Holding period
- Days to weeks
- Time needed
- 20 minutes a day
- BreakoutIntermediateMechanical
Darvas Box Breakout
Nicolas Darvas
Wait for a stock to settle into a box of recent highs and lows, buy the break of the box top on heavy volume, and sell when it falls through the floor.
- Holding period
- Weeks to months
- Time needed
- 20 minutes a day
- BreakoutIntermediateMechanical
NR7 Narrow-Range Breakout
Toby Crabel
Find the bar with the narrowest high-to-low range of the last seven, then buy a break above that bar's high on the following session.
- Holding period
- One to five days
- Time needed
- 15 minutes after the close
- BreakoutIntermediateMechanical
Volatility Breakout (Larry Williams)
Larry Williams
Set a price trigger at today's open plus half of yesterday's range, buy the moment price trades through it, and be out by the close.
- Holding period
- Intraday
- Time needed
- Active through the session
- BreakoutIntermediateMechanical
Opening Range Breakout (ORB)
Toby Crabel
Mark the high and low of the first 30 minutes, buy when price breaks above that high, exit if it falls back through the low — and be out by the close either way.
- Holding period
- Minutes to hours (never overnight)
- Time needed
- The first half of the session
- BreakoutAdvancedDiscretionary
Wyckoff Accumulation/Distribution
Richard D. Wyckoff
Decide whether a trading range is large buyers accumulating or distributing, then join the move once the structure confirms it rather than guessing the low.
- Holding period
- Weeks to months
- Time needed
- 30-60 minutes a day reading charts
What they have in common
- The signal is unambiguous and machine-checkable — there is nothing to interpret
- Most breakouts fail; profitability comes from the minority that keep going
- Position size is usually set from volatility, because the same 'breakout' means different things in a quiet and a wild market
- The stop is the level that just broke, which makes risk knowable before entry
The failure the style cannot design away
In a choppy market a level can break, reverse, and break the other way inside a week. Each of those is a valid signal and a losing trade, and the more liquid and widely watched the level, the more often it gets probed and rejected.
These are documented methods described for study. Nothing here is investment advice, a recommendation, or a claim about future returns — every system on this page has losing periods, and the pages say where.
Reading about a system is not having one.
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