What is a break and retest strategy?

A break and retest strategy waits for price to close through a level, come back to test it from the other side, and hold, then trades in the direction of the break with the stop just past the retest. The logic: a level that was resistance before the break should act as support after it (and the reverse below).

It is the patient version of the opening range breakout. The breakout enters on the break and takes a wide stop; the retest waits for a second look and a tighter stop, and accepts that the second look often never comes. Below: the three edges every retest rule needs, the rules as numbers, three real MNQ sessions (a target, a stop and a day with no trade), and how it fits a trailing drawdown.

The three edges a retest rule must define

1. How close counts? Our example: within 5 points (20 ticks) of the broken level.
2. How long do you wait? Our example: 30 one-minute bars after the break, then the setup expires.
3. What if price never returns? No trade. And a close more than 5 points back inside the range cancels the setup (a failed break).

Without those numbers, "retest" can be found on any chart after the fact.

The rules, as a checklist

On 1-minute MNQ bars:

1. Level: the 30-minute opening range, the high and low from 9:30 to 9:59 ET (a common choice).
2. Break: the first close outside it, between 10:00 and 11:30 ET.
3. Retest: back to within 5 points of the level within 30 bars, with no close more than 5 points back inside.
4. Entry: within 5 bars of the retest, the first close beyond the retest bar's extreme in the break direction.
5. Stop: one tick past the retest's extreme, at least 10 points. Target: 2 × the risk. Flat by 15:50.
6. Cap: one trade a day, or none.

This is taught as a worked example of the rules; that is not evidence it is profitable.

A session where the rules worked

Past session, selected to show the rules, not a typical result. MNQ1!, 1-minute, 2 September 2026; chart: TradingView snapshot, levels and labels marked by Tarrow Futures. MNQ is $2 a point (CME Group contract specs).

A session where the same rules failed

Past session, selected to show the rules, not a typical result. MNQ1!, 1-minute, 2 October 2026; chart: TradingView snapshot, levels and labels marked by Tarrow Futures.

Break above the range high of 31,201.75 at 10:01, retest at 10:02, long at 10:04 (31,249.75), stop 31,201.25: 48.5 points, so 1 MNQ at the same budget. Hypothetical: the best price after entry was 31,258.00, then the stop traded at 10:11, −$97 before costs. At the first session's size of 4, the same stop would have cost $388. The stop sets the size, every time. And one trade a day means no re-entry when price climbed back above the level later that morning. We don't offer a filter that separates holding retests from failing ones; test any filter before trusting it.

A session where the rules did nothing

Past session, selected to show the rules, not a typical result. MNQ1!, 1-minute, 18 September 2026; chart: TradingView snapshot, levels and labels marked by Tarrow Futures.

The range low of 29,765.75 broke on the 10:01 close (29,751.50). In the next 30 bars the highest price was 29,757.00, 8.75 points away: close, but not within 5. No trade. That is the strategy working as written, and it is the moment most traders break it by chasing.

Hypothetical results. The outcomes above are what the written rules would have done on selected past sessions, before commissions and slippage; they are not trades anyone placed. CFTC Rule 4.41: hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.

How it fits prop firm rules

• Daily loss limit. One trade at a $200 example budget is a $200 worst day by rule, a fifth of a $1,000 example limit. Size from the stop with the position size calculator.
• Trailing drawdown. $2,000 ÷ $200 = 10 full stops in a row, fewer once the floor trails up. Under an intraday trailing drawdown, a trade that gets most of the way to 2R and reverses costs twice: at 4 MNQ, +$320 open then a −$180 stop shrinks the room by $500.
• Consistency. Under a 50% rule (example), a $360 best day needs $720 of total profit; check yours with the consistency rule checker.

Common mistakes

• No distance for "retest". Any pullback becomes a retest after the fact. Pick a number.
• No time limit. A level touched two hours later is a new setup, not a retest.
• Chasing the break that didn't come back. The no-trade day is part of the rules.
• Same size for every stop. A retest stop can be twice as wide one day as the next. Size each trade from its own stop.

For how this compares with other day trading strategies under the same prop rules, see futures trading strategies ranked by difficulty.

Test it before you trade it

Fix the level and the three edges before you look at results, judge any other level on sessions you did not use to choose it, count the no-trade days, include costs, then forward-test on a simulator. Our free guide, Build It, Break It, Then Trade It, shows how.

The full break and retest breakdown has the rule card, all three real MNQ sessions step by step and the prop-rule arithmetic. It is free with your email, below.

Charts are TradingView snapshots of past sessions; the levels and labels on them were added by Tarrow Futures. Trade outcomes shown are hypothetical; see the CFTC Rule 4.41 notice after the examples above. Diagrams labelled as illustrations are drawn by Tarrow Futures and are not market data.