Three-Day High-Low Breakouts with Reversal-Based Exits

Summary

This strategy uses the highest high and lowest low from the previous three trading days as breakout levels. A close above the recent high triggers a long entry, while a close below the recent low triggers a short entry. An opposite breakout closes an existing position, making the exit rule depend on a reversal signal rather than a separate fixed stop. The described implementation sizes trades as a percentage of equity and includes chart markers for entries and exits. A BTC/USDT futures backtest window is specified, but no return, drawdown, or other outcome is reported.

The method is a simple short-term momentum and trend-following system with explicit entry and exit rules. The document warns that false breaks can cause repeated trading, particularly in ranging markets, while gaps and slippage may make actual execution differ from expected prices. Because the strategy relies on opposite signals for exits, adverse moves can continue before such a signal appears. Suggested additions include trend, volume, and volatility filters, alternative lookback lengths, fixed or trailing stops, and position adjustments. These are proposals rather than tested improvements.

Key ideas

• The entry levels are the highest high and lowest low of the preceding three trading days.
• A close beyond either level opens a position in the breakout direction.
• An opposite breakout signal closes the current position.
• Ranging markets, false breaks, gaps, and the absence of a separate stop can create losses or trading costs.
• The published backtest settings provide no performance evidence.

Tags

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