A Three-Day Down-Candle Screen for Liquid Large-Cap Chinese Stocks

Summary

This stock-selection method screens shares whose codes begin with 60 and whose turnover rate is between 3% and 12%, then selects those with three consecutive sessions where the close is below the open. It treats a run of down candles as a possible reversal signal and offers a basic Python example for finding qualifying stocks from daily price data.

The document cautions that the screen ignores company fundamentals and the market context before the signal, may return few stocks, and relies on a single technical condition. It suggests combining the pattern with other measures, such as trading volume relative to normal and fundamental indicators, and applying risk controls such as dynamically adjusted stop losses. No backtest, performance figures, or evidence that the signal predicts reversals is provided, so the strategy should be treated as an unvalidated screening idea.

Key ideas

• The screen filters for stocks with codes beginning with 60 and turnover between 3% and 12%.
• It selects stocks with three consecutive sessions in which each close is below its open.
• The author frames the candle pattern as a possible reversal signal but provides no performance validation.
• The screen omits fundamentals and prior market context, and may produce few candidates.
• The document recommends adding other screening factors and using stop-loss risk controls.

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.