Indicator to add avoid false breakout

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My breakout EA work on different currency pairs need an indicator to help to avoid false breakout. May be consider the volume or anything else is OK. Please advise.

Thanks
Peter
Kam Yuk Wong:
My breakout EA work on different currency pairs need an indicator to help to avoid false breakout. May be consider the volume or anything else is OK. Please advise.

Code Base

ATR Cycles

Ryan L Johnson, 2025.11.08 14:29

A volatility filter based on 3 ATR's: a fast ATR, a middle ATR, and a slow ATR

Nice idea. I have found that a simple ATR-based filter on the breakout bar, combined with checking the price position relative to the session open, removes a large share of false breakouts — especially in XAUUSD during the London open.

The more conditions you add your edge will be smaller. In other words if you cannot accept a lot of small losses you will not have outlier trades.
Daniel-gheorghe Muresan #:
The more conditions you add your edge will be smaller. In other words if you cannot accept a lot of small losses you will not have outlier trades.
This is generally true, but there is a way to detect when a move is fake versus when a trend continuation is significant. There are only few effective ways to code a reliable detection system for fake breakouts. The most effective I've seen was a profit retrace detector or point retrace detector. If the position went up about 8% profit and went back down to 0% profit then you can verify that as a fake breakout and close the trade.
Conor Mcnamara #:
This is generally true, but there is a way to detect when a move is fake versus when a trend continuation is significant. There are only few effective ways to code a reliable detection system for fake breakouts. The most effective I've seen was a profit retrace detector or point retrace detector. If the position went up about 8% profit and went back down to 0% profit then you can verify that as a fake breakout and close the trade.
this is why i use a trail stop when i first open a trade -- and increase the distance between the current price and the stop, OR disable the trail stop -- when profit exceeds X.
Michael Charles Schefe #:
this is why i use a trail stop when i first open a trade -- and increase the distance between the current price and the stop, OR disable the trail stop -- when profit exceeds X.
that's a good approach as well

I am building an NY opening range breakout EA for NQ and ES futures also. To avoid fake breakouts, it needs to get another symbols such as DXY index.

Let's share own experience.

Volume alone probably will not fix this because forex volume in MT5 is tick volume. Try a simpler rule first: the breakout candle must close outside the range, then enter only if the next candle does not close back inside. Test this rule alone so you can see if it really adds anything

Two things we measured that may save you some testing time.


1) Tick volume. On FP Markets M5 data 2024-26 (6 symbols), tick volume is strongly tied to the bar's range (correlation 0.48-0.71 after removing the time-of-day pattern). What is left after that helps very little to predict how big the next bar will be (R2 +0.02 to +0.07) and nothing at all about its direction. So as a breakout filter, volume mostly repeats what ATR already tells you.


2) The "closes back inside" idea from Fxrobustix is the one I would test first, and it can be measured directly. A level that gets traded through and then closed back inside on the same bar is a grab; a close beyond it is a real break. We published a free indicator that marks exactly this on every confirmed swing high/low, equal highs/lows and yesterday's high/low, non-repainting, with the nearest untouched level above and below in buffers 2 and 3 so an EA can read them: https://www.mql5.com/en/code/77847


Honest note: on gold, trading every grab on its own had no edge after costs in our tests. As a filter for an existing breakout EA (skip the entry if the level was just grabbed and rejected) it is worth a try, but test it on your pairs before trusting it.


Andrea

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