Consistently profitable systems are difficult to design and trade because markets change over time. For instance, trend-following systems that try to capture large moves will often lose ground during non-trending or choppy markets, while range-based, or countertrend systems that sell relative highs and buy relative lows will miss more significant moves when a market starts trending up or down.

Because a system won’t likely perform well in both types of markets, you must compromise. The following system’s goal is to capture intraday profits regardless of whether the market is trending or not. The approach identifies short-term trends and enters trades in the direction of those trends, but its exit rules also help capture smaller price moves in choppy markets. Adding range-based exit rules to a short-term trend-following system can help minimize drawdowns and provide more consistent equity growth.