5 days range breakout strategy

The 5 days range breakout strategy indicator is a trading tool designed to capture price momentum by identifying and trading breakouts above or below the extreme price levels established over the previous five trading sessions.

Usage

The strategy identifies the highest high and lowest low from the last five trading days to establish a trading range. Traders can use this tool to automate entries based on price movements that exceed these levels by a specific percentage.

• Long Positions: Initiated when the price closes above the 5-day high plus a user-defined entry factor percentage. The exit occurs if the price falls back below the second-highest high or reaches the designated profit target.
• Short Positions: Initiated when the price closes below the 5-day low minus the entry factor percentage. The position is closed if the price rises back above the second-lowest low or hits the profit target.
• Intraday Timing: The script is optimized for intraday trading, with entries permitted before 12:00 PM and all positions automatically closed at 2:00 PM (14:00) to avoid overnight risk.

Details

The script utilizes request.security to fetch daily data independent of the chart timeframe, ensuring the 5-day range is calculated accurately. It stores the highs and lows in arrays and sorts them to determine not just the absolute extreme (High 1/Low 1) but also the secondary levels (High 2/Low 2), which serve as trailing stop-losses or exit triggers. This methodology aims to capitalize on significant volatility shifts while providing structural exits based on recent price action.

Settings

• Entry - % point above high/low: Determines the breakout threshold. Price must exceed the 5-day extreme by this percentage to trigger a trade.
• Profit Target %: Sets the percentage-based take profit level relative to the entry price.
• Trade Type: Allows the user to filter for "LONG", "SHORT", or "BOTH" directions.
• High/Low Line Width: Controls the thickness of the horizontal lines representing the key range levels on the chart.
• Display Sorted Low/High: A debug feature that displays labels on the chart showing the sorted historical values used for the calculations.

FAQ

How do I access 5 days range breakout strategy?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

What timeframes work best for this strategy?

While the script pulls data from the daily interval, it is intended to be used on intraday timeframes (such as 5m, 15m, or 1h) to allow for timely entry and exit during the market session.

Can I change the exit times?

The exit time is currently hardcoded to 14:00 (2 PM) within the script logic to manage intraday risk, but the entry window can be adjusted by modifying the hourly conditions in the source code.