Momentum

Breakaway Gap

From Edwards & MageeRead about it

Robert Edwards and John Magee described the breakaway gap in 1948: a stock opens above its recent range on heavy volume and holds the gap all day. Such gaps tend not to fill soon, because they mark a real change in demand.

Yearly return, after costs−6.4%Nifty 500 +11.5% over the same years

Worst fall−62.4%Win rate35%Matches now1

How it works

The signal every rule true at the close

Opens at least 2% above yesterday's high, and above the 20-day high
Closes at or above the open (the gap held)
Volume at least twice the 20-day average
Close is above the 50-day moving average

The exit whichever comes first

Closes back below the high of the day before the gap (the gap filled)
Or after 20 trading days

Typical holdingUp to a month

An example from the backtestBliss GVS Pharma BLISSGVSThe rules were met at the close before 20 Aug 2026. The trade opened that morning and closed on 21 Sep 2026, 21 trading days later, +16.8% after costs. Exit: 20 days passed.

Stocks meeting the rules 1

At the close of 1 Oct 2026, among NSE's 500 most-traded stocks. A screen, not a recommendation: in the backtest, a trade opened at the next day's open.

1Sterlite TechnologiesSTLTECH · TelecommunicationClose₹955.35Day+5.00%Gap+5.0%Volume vs 20-day avg3.08x

Backtest

1 Jan 2016 to 1 Oct 2026: a 10-stock portfolio following these rules on NSE's 500 most-traded stocks at each date, after 0.2% costs on each side, against the Nifty 500 index.

Yearly return−6.4%Index +11.5%

Compound growth a year (CAGR).

Total return−51%Index +224%

Gain or loss over the whole test.

Worst fall−62.4%Index −38.3%

Largest drop from a high (max drawdown).

Win rate35.1%

Share of trades that closed with a gain.

Profit factor0.9

Rupees gained for every rupee lost.

Average trade−0.56%

Average result per trade, after costs.

Average gain · loss+14.3% · −8.6%

A typical winning and losing trade.

Days held14.3

Average trading days per trade.

Trades891

About 83 a year.

Sharpe ratio-0.36

Return for each unit of ups and downs.

Time invested49%

Average share of the money in trades.

Best · worst trade+176% · −34%

The extremes, after costs.

₹1 lakh following the rules

1 Jan 2016 to 1 Oct 2026: ₹0.49 L against ₹3.24 L in the Nifty 500.

Breakaway GapNifty 500

Falls from the high

Worst in this period −62.4%

Each calendar year

Return in the year, after costs.

Breakaway GapNifty 500

How the 891 trades ended

Each trade's return after costs, grouped.

GainLoss

How sturdy is it?

The same rules, tested again with one thing changed. A result worth trusting holds up across these; a big swing means the headline figure depends on luck or on the exact setup.

Beat the Nifty 500 in 0 of 5 versions and in 0 of 2 halves of the test.

Version	Yearly return	Worst fall	Win rate	Profit factor	Trades
As published10 stocks at a time, 0.2% costs on each side	−6.4%	−62.4%	35.1%	0.9	891
With the market filterNew trades only while the Nifty 500 is above its 200-day average	−4.1%	−48.8%	34.7%	0.93	747
Costs doubled0.4% on each side, as slippage in thinner stocks can be	−9.4%	−72.3%	34.5%	0.84	891
5 stocks at a timeA bigger share of the money in each trade	−8.1%	−71.9%	36.1%	0.94	581
20 stocks at a timeA smaller share in each trade	−2.4%	−43.3%	36%	0.95	1,133

First half · 1 Jan 2016 to 21 May 2021

Strategy−9.2%/yr

Nifty 500+12.8%/yr

Behind the index by 22.0 points a year.

Second half · 21 May 2021 to 1 Oct 2026

Strategy−3.6%/yr

Nifty 500+10.3%/yr

Behind the index by 13.9 points a year.

Recent trades in the backtest

The last 12 trades the rules closed, with 3 still open.

Stock	Opened	Closed	Days	Return	Why it closed
R Systems InternationalRSYSTEMS	30 Sep 2026	1 Oct 2026	1	−10.0%	The gap filled
Tata ChemicalsTATACHEM	16 Sep 2026	30 Sep 2026	10	−14.3%	The gap filled
Tata Investment CorporationTATAINVEST	16 Sep 2026	28 Sep 2026	8	−8.6%	The gap filled
Bliss GVS PharmaBLISSGVS	20 Aug 2026	21 Sep 2026	21	+16.8%	20 days passed
GE Vernova T&D IndiaGVT&D	9 Sep 2026	16 Sep 2026	4	−11.6%	The gap filled
SKY GOLD AND DIAMONDSSKYGOLD	11 Aug 2026	9 Sep 2026	21	+5.0%	20 days passed
Navin Fluorine InternationalNAVINFLUOR	7 Aug 2026	7 Sep 2026	21	+0.0%	20 days passed
Apex Frozen FoodsAPEX	17 Aug 2026	2 Sep 2026	12	−12.5%	The gap filled
Divi's LaboratoriesDIVISLAB	4 Aug 2026	2 Sep 2026	21	+7.5%	20 days passed
Bajaj FinanceBAJFINANCE	3 Aug 2026	1 Sep 2026	21	−9.8%	The gap filled
Hyundai Motor IndiaHYUNDAI	3 Aug 2026	1 Sep 2026	21	+0.3%	20 days passed
RedingtonREDINGTON	31 Jul 2026	31 Aug 2026	21	+16.8%	20 days passed

How the tests work

Universe. The 500 most-traded NSE stocks at each date, by six-month average traded value, re-ranked every month: 1,353 different stocks over the years, 131 of which no longer trade. Testing all of them, not only today's survivors, keeps the results honest.
Period. 1 Jan 2016 to 1 Oct 2026, after a year of history for the long averages, on NSE's own end-of-day files: prices, delivery and futures open interest.
Portfolio. 10 slots, each a tenth of the portfolio's value when a trade opens. A signal at a day's close opens at the next day's open; an exit rule met at a close closes the trade at the next open. When there are more signals than free slots, the strategy's own ranking decides.
Costs. 0.2% on each side of every trade (STT, stamp duty, exchange charges and slippage). Tax and DP charges are not included.
Market filter. Every strategy is also tested opening new trades only while the Nifty 500 closes above its 200-day average. At the last close it was below it.
Robustness. Each strategy is run again with costs doubled, with 5 and with 20 stocks at a time, and judged separately in each half of the test. A result that only holds in one setup is luck, not an edge.
Corporate actions. Splits, bonus issues and demergers are applied from NSE's corporate-actions list, and symbol changes are joined up, so none of them shows up as a gain or a loss.
What is left out. Dividends (as in the Nifty 500 price index it is measured against), taxes, and the chance that a large order moves a thinly traded price.

Swing Lab is a screen and a history lesson, not advice. RupeeVerse is not registered with SEBI as an investment adviser or research analyst. A stock meeting a strategy's rules is not a recommendation to trade it, and past results do not predict future ones. Do your own research.