THE ROLLING BREAKOUT

We normally find a sideways period and the corresponding breakout levels by looking at the chart. However, computerized programs have taken a different approach by always looking backward by the same number of days. If we always use the highest high and lowest low over the past 20 days, we call that a 20-day rolling breakout or simply a 20-day breakout system. For each new day we drop off the oldest day and find the highest high and lowest low of the new 20-day period.
Is the “Rolling Breakout” Better Than the Old-Fashioned Method?
No, but it can be very profitable, and it can be tested on a computer. It has the same profit and risk characteristics as the handdrawn lines but sometimes gets fooled into using the wrong highs and lows. It’s a lot more practical than drawing lines on each of a large number of charts each day. A computer can calculate the breakout trends of all the markets in a few seconds. If you like the diversification of trading a number of markets, the rolling breakout is a good method to use.