ATR-Normalized Pullback Depth for Structure-Based Trading
Summary
This article presents a structure-based trading system that judges pullbacks by their depth relative to both the prior impulse and current volatility. It describes detecting and validating swing points, classifying market structure, mapping liquidity zones, and scoring corrections using retracement depth, candle overlap, momentum decay, and ATR compression. Entries require the score and adaptive depth filters to align with the market state, plus confirmation from a liquidity sweep or displacement candle. Stops are anchored to nearby swing structure with an ATR-based buffer.
The article reports that the system was backtested over a roughly two-month period, but the supplied text gives no equity curve values, trade statistics, instrument, or detailed test conditions. Its claims about improved adaptability therefore cannot be assessed from the excerpt. The approach also depends on chosen swing, ATR, scoring, and risk parameters, which would need independent validation across markets and regimes.
Key ideas
- Pullback depth is measured relative to the preceding impulse and normalized using ATR.
- A rolling ATR regime adjusts acceptable retracement limits and can identify compression.
- Pullback quality combines depth with candle overlap and signs of fading countertrend momentum.
- Trades require structural alignment and confirmation by a sweep or displacement candle.
- Stops are tied to swing levels and adjusted using ATR.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.