Breakout Trend Following with Higher-Timeframe Trend Filters

Summary

This strategy combines breakouts of recent swing levels with higher-timeframe trend direction. It identifies pivot highs and lows on the chart timeframe and as many as two higher timeframes, interpreting breaks above highs as upward trends and breaks below lows as downward trends. Trades are intended to follow aligned trends: enter on a break of a key level, set the initial stop at the prior opposing pivot, and trail the stop as new swing lows or highs develop. The indicator also plots levels and shows trend states for reference.

The author reports that compared with a related moving-average-filtered version, this variant takes fewer trades and had higher win rates and profit factor, but lower net profit. No supporting statistics are supplied, and the published BTC/USDT futures backtest spans only a short period. The document also notes missing position sizing and transaction-cost analysis, and warns that trend reversals can cause losses. These limitations make broader testing and explicit risk controls important before practical use.

Key ideas

• The strategy defines trends through breaks of pivot highs and lows across multiple timeframes.
• It filters entries so that trades align with selected higher-timeframe trends.
• Entries use breakout levels, while stops begin at prior pivots and trail as new swings form.
• The author reports fewer trades, higher win rates, and better profit factor than a related moving-average filter, but lower net profit.
• The short backtest and lack of cost and position-sizing analysis limit the strength of the reported comparison.

Tags

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