Bar-Thirds Signals with a Prior-Bar Trailing Stop
Summary
This strategy divides each candle’s high-low range into thirds and classifies its pattern according to where the open and close fall. It combines the current candle’s class with the previous candle’s class to generate long or short signals. For a long position, the stop uses the low from a configurable number of bars back; for a short position, it uses the corresponding high. The stop can reference a selected timeframe. The published configuration describes daily BTC/USDT futures data over roughly a year, but gives no performance statistics.
The document presents the pattern rules as a way to identify directional moves and the stop as a way to manage exits. It warns that sideways markets can produce repeated false signals, gaps can cause stops to execute worse than expected, and stop settings can lead to premature exits or inadequate protection. The code also uses a default position size of 250% of equity, a material exposure detail alongside the document’s general risk-management claims. No evidence is provided that the method is profitable.
Key ideas
- Each candle is divided into three price regions and classified by the locations of its open and close.
- Long and short signals depend on combinations of the current and preceding candle classes.
- Stops reference a prior bar’s low for longs or high for shorts, with a configurable lookback and timeframe.
- Choppy conditions may cause repeated false signals, while gaps can undermine stop execution.
- The source sets default exposure at 250% of equity, and the document supplies no strategy performance results.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.