Volatile markets are characterized by sudden jumps in prices and volatility breakout systems are designed to take advantage of this type of price action. Volatility breakout systems generally have the following characteristics:
1 A considerable amount of time is passed out of the market.
2 generate a high percentage of winning trades, but earn a small average profit per trade.
3 Do not take advantage of big moves.
4 They're exciting to trade are due to rapid and short-term operations.
5 They were driven primarily by increases in volatility.
In designing this type of system, the key is to anticipate and take advantage of a significant change in volatility and to leave the position without turning a lot of open benefits.