Combining 123 Reversals with Finite Volume Elements

Summary

This strategy combines a 123 reversal signal with the Finite Volume Elements (FVE) volume indicator. It enters long when the reversal component signals a rise and FVE strengthens, and short when both indicate a fall. The 123 component uses consecutive closing-price moves and stochastic conditions; FVE estimates buying or selling pressure from price movement and volume. The source also exposes parameters for stochastic calculations, FVE, and reversing the trade direction.

The document describes the method and gives a brief backtest configuration for BTC/USDT futures over about a month, using hourly bars with a shorter base period. It provides no performance results, so the stated benefits of filtering false signals or earning from arbitrage are not demonstrated. Despite its name, the rules combine directional signals and do not describe a market-neutral arbitrage. The strategy may give false signals in choppy markets, and failed reversals can lose money; the document suggests parameter adjustments and stop losses but does not specify tested risk controls.

Key ideas

• The strategy requires matching directional signals from a 123 reversal component and FVE.
• The 123 signal combines consecutive price changes with stochastic oscillator conditions.
• FVE uses price movement and volume to estimate buying or selling pressure.
• The supplied backtest setup does not include performance results, so profitability is unverified.
• Choppy conditions and failed reversals are identified as risks.

Tags

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