Combination Scalping: Filtering Trades by Historical Candle Patterns and Expiry
Summary
Combination Scalping proposes filtering an existing trading system by analyzing its historical outcomes across different trade expiration times and profit targets. For each setting, the author records candle measurements from the three bars before entry: range, body size, and direction. Repeated configurations associated with profitable trades and no recorded losses are grouped into ranges, then used as conditions for an automated system. The example emphasizes choosing an expiry that performed well for a given pattern and comparing the surrounding chart conditions to formalize a filter.
The article illustrates the idea with historical combination counts and tester examples, but those do not establish out-of-sample reliability. Its method depends on the available quote history and has limited coverage for larger candles and targets; it is presented as most applicable to short-term trading. Selecting patterns because they had no losses in the same history risks overfitting, and the document does not describe controls for that risk or provide a rigorous independent validation.
Key ideas
- The method evaluates a trading setup across different forced closing times and profit targets.
- It records the range, body, and direction of the three candles before entry to identify historical configurations.
- Configurations with profitable outcomes and no recorded losses are proposed as entry filters for an automated system.
- The author says available history limits statistical coverage, especially for larger candles and targets.
- Historical selection without independent validation may overfit past outcomes.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.