technical
Volatility Breakout
Volatility Breakout identifies periods of price compression and consolidation, then enters positions when price breaks out of the range with increased volume. Using Average True Range (ATR) to measure volatility contraction and expansion, this strategy aims to catch the early stages of explosive price moves.
52%
Win Rate
1.4
Sharpe Ratio
High
Risk Level
4-24 hours
Avg Hold
Strategy Overview
Timeframes15m, 1h, 4h
Ideal MarketConsolidating markets before major moves
Min Capital$5,000
Avg Hold Time4-24 hours
Strategy Parameters
ATR Period14 candles
Average True Range calculation period
Compression Threshold<50%
ATR contraction vs. average
Breakout Multiplier1.5x ATR
Price move threshold for entry
Volume Confirmation>1.5x
Volume spike vs. average
Entry Signals
ATR compression detected (low volatility)
Price breaks above/below consolidation range
Volume spike confirms breakout
Momentum shift in breakout direction
Advantages
- Captures large explosive moves
- Objective entry criteria
- High risk-reward potential
- Works across multiple asset classes
Risks to Consider
- False breakouts can cause losses
- Gapping can result in poor entries
- Quick reversals after breakout
- Lower signal frequency
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Important Risk Information
Past performance does not guarantee future results. All trading strategies involve risk, and you may lose some or all of your invested capital. The win rates and Sharpe ratios shown are based on backtesting from 2015-2024 and may not reflect future performance. Always use proper position sizing and risk management.