The Larry Williams Volatility Break-out strategy

The Larry Williams Volatility Break-out strategy.

Volatility Break-out strategies are based on the concept that if the market makes a move of a certain size within a short period of time, this move will continue for some time. The LW Volatility Break-out strategy is traded on a 5-minute chart and can be applied to all instruments.

This strategy is available free of charge in the NanoTrader trading platform.

Overview of the Volatility Break-out strategy

When is a position opened?

The LW Volatility Break-out Strategy is based on the highest price and the lowest price of the previous day. This results in Larry Williams' break-out range. If the price rises above the break-out range, a long position is opened. If the market price falls below the break-out range, a position is sold short. Positions can be opened manually or automatically using NanoTrader.

When is a position closed?

The strategy uses a profit target, a stoploss and a time filter. The profit target and stoploss are both placed at a certain distance from the entry price, which is a multiple of Larry Williams' break-out spread. The default setting for both the profit target and the stoploss is 2x the spread.

If the position does not reach the profit target nor is it stopped out, it will automatically closed by the time filter at 21:59. In order for the profit target order, the stoploss order and the time filter to work automatically, the trader simply activates the TradeGuard in the chart.

This example shows a buy signal. The market has risen but does not reach the profit target (green line). The market starts to fall and the stoploss (red line) is hit. The position is closed with a loss.

A trade example of the Larry Williams trading strategy.

This example shows a short sell signal. The profit target (green line) is reached. The position is closed with a profit.

Larry Williams Volatility Break-out trade.

This example shows the time filter in action. The market price does not reach the profit target and is not stopped out. The time filter simply closes the position at 21:59.

Free Larry Williams trading strategy.

Results generated by the strategy

These examples (Nasdaq, Dow Jones, DAX and Bund) show back-tests of Larry Williams' standard break-out strategy over several years. The results vary but none is negative.

Results (profit and loss) of the trading strategy called Volatility Break-out.