What it does
The first fifteen minutes of trading set a high and a low for the day's early range. When a stock later breaks above that high with more volume than usual, it is often the start of a move. This strategy buys that moment.
Breakouts fail often. The idea only works because the stop is close and the target is further away, so the wins, when they come, are bigger than the losses.
How it makes money
From 09:35, it watches for a five-minute close above the highest high of the previous three bars, with volume above its 20-bar average, while the stock is above its 20-period average. All three at once, or no trade.
A stop sits one to one-and-a-half percent below the entry and a target two to three percent above it. The aggressive version also trails its stop once the trade is in profit, so a move that reverses gives back less.
A worked example, in rupees
Illustrative. ₹1,00,000 account, balanced version, a stock that opened at ₹1,000.
- 09:15 to 09:30 range
- ₹1,000 to ₹1,012
- 09:45 entry
- ₹1,015, a close above the range high on strong volume
- Position
- 8% of the account, 8 shares
- Stop
- ₹1,002, 1.25% below
- Target
- ₹1,040, 2.5% above
- 11:20 exit
- ₹1,040, target reached
- Result
- ₹200 before charges, 0.2% of the account
For every day like that there are two or three where the breakout fails within the hour and the stop costs ₹100. Whether that trade-off pays is an empirical question. In our two-year test it did not: this family lost after charges and is not published.
When it does well, and when it hurts
Does well when
- News-driven mornings, where a stock has a reason to move and the early range is decisive.
- Rising markets, since it only buys.
Hurts when
- Quiet, range-bound mornings where the breakout is a fake and the stock settles back into the range.
- Choppy markets generally. The hit rate falls below what the stop-to-target ratio needs.
What the robot does when a trade goes wrong
These are the real rules, in the order the strategy checks them. Nothing here needs you to be watching.
- 1
Stops close, by design
About four ATRs below the entry. A failed breakout gives back a bar or two of range immediately, and the stop is set so a real failure, not noise, triggers it.
- 2
Takes the target
Two to three percent above. The edge, if there is one, is that this is twice the stop.
- 3
Trails once in profit
The aggressive version moves its stop up behind the price so a move that reverses keeps some of the gain.
- 4
Closes everything by 15:15
Nothing is held overnight.
Adjustments, and why it does not make them
Breakout traders often re-enter on a second breakout after the first fails. This strategy can, if the conditions are met again, but it never widens the stop on a trade that is going wrong and never buys more to lower its average.
The three versions
Each strategy comes as conservative, balanced and aggressive. They share the idea and differ in how much they risk once in.
| Setting | Conservative | Balanced | Aggressive |
|---|---|---|---|
| Companies | 3 | 5 | 6 |
| Looks for entries until | 11:00 | 11:00 | 12:00 |
| Stop below entry | 1% | 1.25% | 1.5% |
| Target above entry | 2% | 2.5% | 3% |
| Trailing stop once in profit | none | none | 1% |
| Position size | 5% of the account | 8% | 12% |
Entry: Between 09:35 and 11:00, when close breaks the 3-bar high with volume above its 20-bar average
Action: Buy intraday (MIS) while price holds above the 20-EMA
Exits: Stop loss at 1.25% below entry, profit target at 2.5%, and square off by 15:15
Want a stricter filter, a different stop, or your own stock list? Open a working copy in the builder and run a backtest.
Customize this ruleRisks you should know
- A low hit rate is part of the design, which is hard to sit through: the account can drift down for weeks between the winning days.
- Charges on frequent small trades.
- Not yet published; it has not cleared the quality gate.
The jargon, explained
- EMA
- An average of recent prices that leans towards the latest ones. Price above its EMA is drifting up; below, drifting down.
- ATR
- The typical size of one bar's move. Stops in these strategies are set a few ATRs away so ordinary noise does not trigger them.
- Intraday (MIS)
- A position the broker requires you to close the same day. It allows larger sizes and, for stocks, is the only way to sell short.
- Square-off
- Closing a position. These strategies square everything off by 15:15 so nothing is held into the next day.