Knowledge · Terms · Bailout Exit

Bailout Exit

Indicator concept
Bailout Exit — First Profitable Open (Larry Williams)
Exit at the first profitable candle open after a minimum holding time. Larry Williams' technique to lock in small wins instead of waiting for reversals.

Origin

Described by Larry Williams in Long-Term Secrets to Short-Term Trading. Williams calls it "First Profitable Opening" — the first moment the price opens above the entry (for a long) after a minimum number of bars has been held.

Logic

After an entry you wait bailout_min_bars candles. Then: if the open of the next candle is above the entry price (long) or below it (short), you exit immediately at the open.

Bailout conditions (long):
  1. bars_in_trade >= bailout_min_bars
  2. candle_open > entry_price
  → EXIT at open

Botty implementation

strategies/conditions.py → exit condition bailout_exit. Runner-handled (like time_stop — no entry in EXIT_SIGNAL_FUNCTIONS, checked directly in the runner).

Parameter: bailout_min_bars (default: 1) — minimum number of bars before the bailout check.

Why it makes sense

  • Locks in small gains before a retracement wipes them out.
  • Fast capital recycling — short holding times, many trades possible.
  • Psychologically clean — a clear rule, no discretion.

Trade-off

The bailout exit can cut off big winners that only really run after several bars. Combining it with a wider trailing stop (that kicks in later) can help — or enable bailout only for certain strategies.

Combination

Williams himself combined bailout with a time stop: either the bailout triggers first (a profitable exit) or the time stop closes after N bars (limiting the loss).