Many trend-following systems generate trade signals when price hits either boundary of a breakout channel, going long when price hits a new n bar high or going short when it drops to a new n -day low in the hope the trend will continue. However, such systems usually trigger many whipsaw trades when the price fails to follow through in the expected direction.

This system tries to cut the losses of whipsaw trades with the HighestLowest- Range (HLR) indicator, which shows prices relative location within the high-low range of the past n bars.