Candle Count Trend Following with Fixed Profit and Stop Levels
Summary
This strategy counts consecutive bullish or bearish candles to establish directional bias. When the count reaches a chosen threshold, it enters in the direction of that run: a long after a specified sequence of bearish candles during an uptrend, or a short after bullish candles during a downtrend. The example sets the bar counter to five and defines fixed profit and stop distances.
The source describes a BTC/USDT futures backtest on four-hour bars over a stated period, but provides no performance results or measurements. It also closes positions when the opposite count signal appears. Smaller count thresholds may react sooner but are more exposed to whipsaws, while fixed exits can constrain gains or cause premature closure. The accompanying prose describes trend context, though the code’s direction selection relies on which count signal occurred most recently; this implementation detail should be checked before treating it as a validated trend filter.
Key ideas
- Consecutive candle directions are counted to identify recent bullish or bearish momentum.
- A threshold count triggers entries opposite to the counted candle sequence, according to the most recent signal state.
- Fixed profit and stop distances define exits, and an opposing count signal can close a position.
- Shorter counting thresholds may respond faster but can produce more false signals in ranging markets.
- The published backtest settings describe a test setup but provide no performance evidence.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.