When exactly should you enter a breakout trade?

When a candle closes past the level — not when price first pokes through. The poke is often just stop-collection; the close is the market committing. Enter at or just after that close, as long as price hasn't already traveled too far past the line.

What is chasing a breakout?

Entering after price has already run well past the broken level. It's a math problem: your stop still belongs back inside the range, so every pip you chase adds to your risk and subtracts from your reward. In our ledger, entries more than 15% of the range's width past the line lost 22.2R across 31 trades.

Where should the stop-loss go on a breakout trade?

Back inside the range — deep enough that a routine re-test of the broken level can't reach it. If price gets comfortably accepted back inside the range, the breakout idea is dead. Your stop belongs where that's proven, not where the loss feels small.

What is a realistic target for a breakout trade?

At least twice your risk. The classic target is the measured move — the height of the range projected from the break. If the setup can't pay around 2R to a sensible target, it can't survive a win rate under 50%, and breakout win rates usually are.

How much should I risk per breakout trade?

A fixed slice of your account — 1% is the standard our own alerts assume — calculated from the actual entry-to-stop distance, never a fixed lot size. This strategy loses more often than it wins; surviving the streaks is a sizing decision, not a willpower decision.

Price closes 2 pips past a 30-pip range's high. The chase rule says…

Take it — 2 pips is about 7% of the range, well inside the 15% budget

Skip — any distance past the level is chasing

Always wait for a 50% pullback first

The stop on a long breakout of a range high belongs…

Back inside the range, where price getting re-accepted would prove the idea wrong

A fixed 10 pips away on every pair

A breakout setup only offers 1.2R to its natural target. You should…

Skip it — payouts that small can't carry a win rate under 50%

Take it — a winner is a winner

Double the position size to make up for it

How to Trade Breakouts: Entries, Stops, and the Chase Rule

You've found a range worth watching. Now the rules — and they're rules, not suggestions, because the moment a breakout goes live is exactly when your judgment is at its worst. Everything here can be decided before the candle closes. Five checks. Index-card sized.

Rule 1: wait for the close

Our Fibonacci course ends with a line worth stealing: the close is the verdict, not the poke. Nowhere is it more literal than here. A wick through a range high is usually just the market collecting the stops parked there — that's what most of lesson one's seven-in-ten failures look like. A candle body closing past the level is different: the market went there and stayed.

So the trigger is the close. Not the alert ping, not the first tick through — the close. This one habit filters out most fakeouts, and it's free.

Rule 2: the chase budget — 15%, then it's gone

Here's the most expensive number in this course. Our engine tags every entry with how far past the line it triggered, measured against the range's size. The verdict:

Entries within 15% of the range past the level carried the entire strategy.
Entries past 15% lost 22.2R across 31 trades.

Not "did worse" — lost, as a group, steadily. And it's pure arithmetic. Your stop belongs back inside the range no matter where you got in (Rule 3). So every pip you chase gets added to your risk and subtracted from your reward. Chase far enough and a clean 2.5R setup quietly becomes a 1.4R setup with the same odds — which Rule 5 will tell you is a losing ticket.

The budget scales: 15% of a 40-pip range is 6 pips of grace; of a 20-pip range, 3. Past the budget? The trade is gone. Not worse — gone. Missing a winner costs nothing. Chasing that cohort cost 22R.

Rule 3: the stop goes where the idea dies

A breakout's claim is simple: price has left the range for good. That claim isn't disproven when price re-touches the old line — broken levels get re-tested all the time, and the re-test is often the last good entry, not the failure. The claim dies when price moves back inside the range and gets comfortable there.

So that's where the stop goes: inside the range, deep enough that a routine sweep can't tag it. Yes, it's wider than tucking your stop one pip behind the line. It's also the difference between placing the stop where you're wrong and placing it where the loss feels small. The one-pip version gets collected politely, week after week, by exactly the sweep behavior this course keeps describing.

Then size the trade to the stop, never the other way: 1% of the account, computed from the real distance. The position size calculator does it in seconds.

Rule 4 and 5: pay me 2R, or no deal

The target is the measured move — the height of the range, projected from the break — sanity-checked against whatever's in the way (this week's pivots will tell you if a shelf sits 10 pips into your path). Before entering, put it in R: if the target pays less than about 2R from your entry and stop, skip. A strategy that wins a third of the time cannot afford small winners.

One more thing the ledger says about how this feels: our losers resolve in about an hour and a half on average, and our winners take four hours. That's healthy. The market proves you wrong quickly and pays you slowly — so a trade that just sits there isn't broken, it's normal.

Here's the whole playbook on one chart:

Figure · the entry playbook

Close past the line, inside the budget — stop inside, target 2R+

The candle body closes past the ceiling inside the 15% chase budget: that's the entry. The stop goes back inside the range, where the idea is actually wrong. The target is the range's own height, projected from the break — it should pay at least 2R.

Next: the setup all of this was built for — the London breakout, where the range, the clock, and the crowd line up on schedule.