Combining 123 Reversal and Gann Swing Signals

Summary

This directional strategy combines a 123 reversal system with a Gann swing oscillator. The 123 component uses recent closing-price relationships and smoothed stochastic measures around a level of 50 to identify possible reversals. The Gann component tracks changes in recent highs and lows to determine swing direction. The combined rules act only when both components point the same way; the source closes positions when they disagree. Although the document calls this arbitrage, the described rules are directional signal confirmation, with no paired instruments or pricing relationship.

The parameter list gives defaults for the stochastic calculation and a five-period Gann lookback. Published settings specify BTC_USDT Binance futures, hourly bars, and a 15-minute base period over January 6 to February 5, 2024. No return, drawdown, or trade-count results are included. The document argues that agreement may filter some signals, but also acknowledges that disagreement can leave the strategy inactive and that either component can produce false signals. It suggests parameter adjustment, additional indicators, market-specific tuning, and stop losses, without presenting evidence that these changes improve outcomes.

Key ideas

• The strategy combines a 123 reversal signal with a Gann swing direction signal.
• Trades are entered only when both components indicate the same direction, and positions close when they disagree.
• The 123 component uses closing-price patterns and smoothed stochastic values relative to a threshold of 50.
• The document's use of arbitrage refers to a directional strategy rather than a spread or pricing arbitrage method.
• Published BTC_USDT futures settings are supplied, but no performance results are reported.

Tags

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