Countertrend Entries from Oversized Candles with Configurable Stops

Summary

This script describes a countertrend strategy that enters long after a large bearish candle and short after a large bullish candle. It identifies unusually large bars by comparing each bar’s high-low range with a moving average of recent ranges, then requires the candle body to exceed a configurable fraction of that range to filter out doji-like bars. A confirmation-bar option can delay entry until a subsequent bar confirms the setup.

Risk controls are configurable: the script offers strategy-defined, swing-point, or ATR-based stops, a take-profit level based on a risk-reward ratio, and an optional trailing stop. The published excerpt gives implementation settings and logic, but no backtest results or evidence that the approach is profitable. Its effectiveness may depend on instrument, timeframe, parameter choices, and how often large candles actually reverse; the excerpt also ends before all entry and exit rules are visible.

Key ideas

• The strategy treats an unusually large bearish candle as a potential long signal and an unusually large bullish candle as a potential short signal.
• Bar size is measured against the average high-low range over a configurable lookback period.
• A minimum candle-body proportion is used to exclude small-bodied bars.
• Optional risk controls include swing-based or ATR-based stops, risk-reward take-profit levels, and trailing stops.
• The provided material contains no reported performance results.

Tags

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