Channel breakout

The code

The detail to watch is which days go into the channel. It is built from the days before yesterday and then compared with yesterday's close. If yesterday were inside its own channel, its close could never be above the top of it.

Data the script reads: invented-prices.csv. Invented values, never a real market. Save it in one folder and run the script from that folder.

The file that was run: channel_breakout.py

# Channel breakout: act when price leaves the range it has been in.
# Prices come from invented-prices.csv: a random walk made by a script, never a real market.
# The result therefore says nothing about any real market. Read it for the method.
import csv

highs, lows, closes = [], [], []
with open("invented-prices.csv", newline="") as f:
    for row in csv.DictReader(f):
        highs.append(float(row["high"]))
        lows.append(float(row["low"]))
        closes.append(float(row["close"]))

# Example values, picked only because they are easy to follow. They are not a suggestion.
ENTRY_DAYS = 20      # the channel that has to be broken to get in
EXIT_DAYS = 10       # a shorter channel on the other side, to get out
COST = 0.10          # points paid on every completed trade, a stand in for the spread

holding = False
entry = 0.0
results = []
START = ENTRY_DAYS + 1

for day in range(START, len(closes)):
    yesterday = day - 1
    # The channel is built from the days BEFORE yesterday, then compared with yesterday's close.
    # Nothing from today is used to decide.
    top = max(highs[yesterday - ENTRY_DAYS:yesterday])
    bottom = min(lows[yesterday - EXIT_DAYS:yesterday])
    price = closes[day]          # act at today's close

    if not holding and closes[yesterday] > top:
        holding, entry = True, price
    elif holding and closes[yesterday] < bottom:
        results.append(price - entry - COST)
        holding = False

if holding:
    results.append(closes[-1] - entry - COST)

wins = [r for r in results if r > 0]
print("Trades:", len(results))
print("Trades that ended above zero:", len(wins))
if wins:
    print("Largest single trade:", round(max(results), 2))
print("Total points after costs:", round(sum(results), 2))
print("Total without the largest trade:", round(sum(results) - max(results), 2))
print("Simply holding over the same days:", round(closes[-1] - closes[START] - COST, 2))

What the run printed

Trades: 14
Trades that ended above zero: 5
Largest single trade: 4.43
Total points after costs: -9.94
Total without the largest trade: -14.37
Simply holding over the same days: -10.82

Output of the run on 9 Oct 2026, copied as printed. Every input to this run was invented, so the result says nothing about any real market.

How to read it

Fourteen trades, five of them above zero. As with most rules of this kind, most breakouts fail: price pokes outside the channel and comes straight back.

The script prints the total with and without the largest single trade. If taking one trade away changes the picture, the result is one event, not a pattern. Here the total is below zero either way.

The total is close to what simply holding did over the same days. The prices are a random walk, so a new high in this file tells you nothing about the next day. The numbers say nothing about any real market.