What you will learn
- Break and retest
- Failed breakout
- Pullback versus reversal
- Gap and opening behavior
Break and retest
A break-and-retest description needs separate rules for the break, return and confirmation. Without them, a reviewer may select only attractive completed examples. Define when the sequence expires if the return never occurs.
Failed breakout
A failed breakout is identified by a specified return or invalidation, not merely because the eventual trade lost. Record when failure becomes observable. Later knowledge should not be backdated to improve an entry or exit.
Pullback versus reversal
A pullback and reversal can share the same early price path. Their distinction may require later information. Use conditional scenarios and predetermined exits rather than assuming the label can always be known immediately.
Gap and opening behavior
Gaps and opening moves can skip prices. An apparent level crossing on a bar chart does not prove execution at that level. The strategy's fill model must allow for unavailable prices and adverse movement.
Worked example
A market moves from 100 directly to 103 across a planned trigger at 101. A historical line crossing does not justify recording a fill at 101 when no executable observation supports it.
Try it yourself
Write a conservative handling rule for the gap example and explain how it changes a backtest compared with an exact-trigger fill.
Show the worked solution
Use an available subsequent quote or a documented gap-fill assumption, including costs, and flag uncertainty. The result may be worse than the exact-trigger model; that difference is part of implementation feasibility.
Apply this to your course project
Annotate a fixed sample using written swing and break rules, including ambiguous examples.
Keep the calculation inputs, assumptions and decisions with your work. Practical exercises are self-reviewed; the scored knowledge checks assess the questions shown, not an independent certification of practical competence.