Consecutive Candle Trend Entries with Fixed and Trailing Exits

Summary

This strategy treats runs of rising or falling closes as directional signals. It counts consecutive candles whose closes are higher or lower than the preceding close, resetting the opposite count; a flat close resets both. Reaching the chosen count opens a long or short position. The published defaults are three candles in either direction, with fixed stop loss and take profit distances of 500 ticks. A trailing exit also tracks the post-entry high for longs or low for shorts, and closes after a favorable move of at least 200 ticks followed by a pullback or rebound of 50 percent of the move. The stated test setup uses BTC/USDT futures on hourly bars from April to May 2024; no results are reported.

The method is simple and aims to participate in persistent moves while protecting gains after a favorable excursion. Its signals can be noisy in choppy markets, potentially increasing turnover and slippage. Fixed tick exits may also fit some instruments or volatility conditions poorly. The material proposes filters and adaptive exit settings as possible refinements, but supplies no evidence that those changes improve performance.

Key ideas

• The strategy counts consecutive higher or lower closes to trigger long or short entries.
• A close equal to the previous close resets both directional counts.
• Fixed stop loss and take profit exits are combined with a pullback-based trailing exit.
• The trailing rule activates only after a specified favorable price move.
• Choppy conditions can generate frequent signals, and fixed tick distances may not adapt to volatility.

Tags

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