Study: the breakout method
Written & maintained by Evan Maus covering the method, the data and an honest word on results.
Research: does breakout trading actually work? 23-year, survivorship-free backtest.The whole system, in plain rules
The edge is these five rules plus the discipline to run them, not chart-reading talent. Read them once and the rest of the course is just depth on each one.
- 1
The gates
what even qualifiesThe name must clear fixed filters before you even look at the chart. Fail any one and it is out.
- +30-50% in 1-3 months, near its 52-week high.
- Average daily range above ~5%. Liquid enough to trade cleanly (no leveraged ETFs).
- Tight, orderly base: higher lows, range contracting on fading volume.
- 2
The line
the one thing you buyThere is one line you buy: the top of the base.
- One thing to buy: the break of the base top on a volume surge. Never buy inside the base, never chase far above the line.
- Where you buy relative to the line is the single biggest lever in the whole system.
- 3
Sizing
fixed risk, every timeRisk the same small slice of your account on every trade (approx. 0.5-1%). Size falls out of the stop, not intuition.
- Shares = (account x risk %) / (entry - stop). Fixed risk, every time.
- A tighter stop buys more size at the same risk. Twenty losses still leave you standing.
- 4
Regime
when to press, when to sit outOnly press when the market is risk-on. Otherwise size down or sit out.
- Risk-on = QQQ 10-day above its 20-day, 10-day still rising. Same gate the scanner uses.
- The same setup fails in a weak tape. Regime decides whether you trade at all.
- 5
Exits
one rule, decided in advanceDecide the whole exit before you enter. One rule, no improvising.
- Stop is the low of the breakout bar. That distance is 1R.
- Day 4: sell 40% into the pop, move stop to breakeven. Cannot lose money.
- Trail the rest on the 10-day MA. Exit the first daily close below it.
That is the entire edge. Backtested honestly and survivorship-free, it holds up: modest but real, not a get-rich number. Adding discretionary feel on top, picking the prettier chart, sensing the cleaner break, did not beat simply following the rules. Your job is not to out-think the system; it is to run it without flinching.
New to the method? Start here
Run your first trade by the rules, in 2 minutes
No theory dump. Click through a real breakout and run the checklist yourself: strength, base, the buy at the line, the trailing exit. Instant feedback at each step. By the end you'll know exactly what the drills are testing.
The 60-second reference
Read a chart in 60 seconds
Coming from fundamentals or sentiment? Get the three basics first, then the method below clicks.
The system, not a feel for charts
Six modules, 19 lessons. Each one goes deeper on a rule from the top of the page: the gates, the line, sizing, the exit, the regime. Module 1 is free; tap any lesson to open it.
Foundations
What a breakout is, and why the edge is the rules — not chart-reading talent.
What you'll learn
- Name the four parts of every breakout so the rules have something to point at
- Understand why a fixed, mechanical process beats discretionary chart-reading
- Separate win rate from expectancy, and why a 30% win rate still pays
The gates
The fixed filters a name must pass before you will trade it — the same ones the scanner ranks.
What you unlock
- Apply the prior-leg-up gate: only momentum leaders qualify
- Apply the base gate: tight and contracting, not deep and sloppy
- Apply the ADR, liquidity and near-52-week-high gates
- Treat every gate as pass/fail, not a judgment call
4 lessons · 25 min · 2 quizzes
- The prior leg-up6m
- The base: tight, orderly, contracting8m
- Volume dry-up5m
- The hard gates: ADR, liquidity, near-highs6m
The breakout
The one setup this whole tool is built around, and the one line you buy.
What you unlock
- Buy the break of one line, the pivot, on volume, never before
- Know exactly where the buy and the stop go, by rule
- Know why the entry line is the single biggest lever in the system
3 lessons · 17 min · 2 quizzes
- The breakout6m
- What makes a breakout clean6m
- Common breakout mistakes5m
Execution & exits
Entries, stops, sizing, and the sell rules that make a setup pay.
What you unlock
- Trigger entries on the break instead of anticipating
- Place a stop that defines your R before you enter
- Size every position by fixed risk so no single loss can hurt
- Exit by one fixed rule: trim 40%, stop to breakeven, then trail the 10-day
4 lessons · 24 min · 2 quizzes
- The entry trigger6m
- Where the stop goes5m
- Position sizing: fixed risk6m
- Sell rules that make money7m
The wedge breakout
The specific rules that make a wedge-breakout trade worth taking.
What you unlock
- Identify the near-52-week-high requirement and why it disqualifies laggards
- Enter on the descending trendline break with volume confirmation
- Size the stop to low of day capped at 1 ADR
- Trail winners on the 10-day SMA and let them run
2 lessons · 14 min · 2 quizzes
- The wedge breakout: the rules that matter8m
- Wedge exits and why near-new-highs is the edge6m
Market context
When to press and when to sit out.
What you unlock
- Read the market regime before grading any single name
- Press in risk-on and size down or sit out in risk-off
- Favor leaders with relative strength over lottery tickets
2 lessons · 10 min · 1 quiz
- Market regime5m
- Leadership & relative strength5m
Practice guides
The longer reads behind the drills: how to actually practice so the reps stick. Each one stands on its own.