A Long-Only Gold Breakout System with ATR Stops and a Fixed-R Target

Summary

The document describes an automated XAUUSD strategy on four-hour bars. It enters long when a completed candle breaks above the prior 20-bar high, provided the close is above a 200-period EMA. Position size is calculated from a one-percent balance risk and a stop two ATRs from the fill; the default exit is a fixed target at twice that risk. It permits one position at a time, skips entries when spread is large relative to the stop or near session close, and defaults to disabling shorts.

A single-broker demo backtest from 2020 through September 2026 reports positive net profit, a 1.77 profit factor, and 11.38% maximum equity drawdown across 198 trades. Results varied sharply by year, with most profits concentrated in 2024 and 2025; the earlier period was largely flat, including a losing year. Enabling shorts reduced results in the same sample. These findings are specific to one broker, period, and mostly rising gold market; the stated test also had no commission, and changing costs, market conditions, or execution can alter performance.

Key ideas

• The system buys four-hour breakouts above a 20-bar high when price is above a 200-period EMA.
• It sizes positions from stop distance, using a two-ATR stop and a default target twice the initial risk.
• The reported backtest was profitable overall, but gains were concentrated in the final two full years shown.
• Short trades weakened results in the tested sample, motivating the long-only default.
• Broker costs, the single test period, and gold’s upward trend limit how broadly the reported results can be applied.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.