Combining a 123 Reversal Signal with a T3 Moving Average

Summary

This combined system pairs a short-term reversal signal with a T3 moving-average trend signal. Its 123 component looks for a close that turns upward after a lower close, with stochastic conditions used as confirmation; the source code specifies a 14-period stochastic, smoothing settings, and a level of 50. The T3 component is built from successive exponential moving averages and a volume factor. The system takes long or short positions when both components align in the same direction, and closes positions when they do not provide a combined directional signal.

The document explains the indicator logic and provides BTC/USDT futures backtest settings for a one-month period, but gives no reported performance results. Its prose contains an inconsistency: it describes a sell signal when price crosses above T3, while the source code assigns direction according to whether price is above or below the T3 line. The claimed reduction in false signals is not supported by results here. Reversal signals can fail, moving-average exits may be early, and parameter choice, slippage, and costs may affect performance. Suggested filters and tuning remain proposals.

Key ideas

• The system combines a 123-style price reversal setup with stochastic confirmation.
• A T3 average derived from repeated exponential averages supplies a directional trend signal.
• Trades are entered only when the reversal and T3 components agree.
• The source code and prose differ in how they describe the T3 sell condition.
• The published backtest configuration contains no reported performance metrics.

Tags

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