Fiari Four-Price Breakout Trading with Opening-Price Stops

Summary

The article describes a short-term breakout system based on the prior session’s high and low, with the prior close and current open used as contextual prices. A break above the prior high triggers a long entry, and a break below the prior low triggers a short entry; positions are generally closed at the session’s end. The author adds an interpretation for failed breakouts: exit when price crosses back through the current open. If price repeatedly crosses that level, the article suggests consulting an hourly chart and applying a trailing stop based on hourly lows or highs.

A historical test on weekly Shanghai Composite data reports results from 1991 through July 2016, including positive aggregate points and a win rate below two thirds. The test omits a stop because the system involves subjective judgment, limiting how directly its results can be reproduced. The article also discusses sizing positions by the amount risked at the stop and adding to winning positions only within locked-in gains. The rules are presented as an interpretation of Fiari’s trading, not a definitive account of his original method.

Key ideas

• The core entry signals are breaks of the previous session’s high or low.
• The author proposes exiting a breakout trade if price crosses back through the current session’s open.
• Hourly charts can help manage repeated crossings and move stops as a trend develops.
• The reported weekly-index backtest does not include a stop and uses subjective assumptions.
• Position size should reflect the distance to the stop and a predefined risk budget.

Tags

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