Combining a 123 Reversal Signal with Consecutive Up Bars

Summary

This strategy combines a price-and-stochastic reversal signal with a counter for consecutive rising bars. It is intended to trade only when both components agree, using customizable stochastic and bar-count settings. The document describes long and short entries, with an option to reverse their direction, and gives a BTC/USDT futures backtest configuration spanning roughly one year; it reports no performance statistics.

The proposed filter aims to screen out some isolated reversal signals, but agreement between indicators can also reduce the number of trades. The source code and prose do not fully align: the code’s consecutive-bar component produces a positive state after enough qualifying bars but no corresponding negative state, so the described short-side agreement may not work as stated. The entry conditions also differ from parts of the prose description. The document identifies parameter sensitivity and reversal losses as risks, and suggests stop losses and testing across markets, but provides no evidence that these changes improve results.

Key ideas

• The strategy combines a 123 price-and-stochastic reversal signal with a consecutive-bar condition.
• Trades are intended to occur only when both signal components agree.
• The document provides BTC/USDT futures backtest settings but no performance results.
• The source’s consecutive-bar logic appears unable to confirm short signals as described.
• Parameter choice and reversal losses are identified as risks requiring evaluation.

Tags

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