Doji Reversal Entries with Moving-Average Filtering and Fixed Risk Targets

Summary

This strategy identifies Doji candles by comparing candle-body size with the full high-to-low range, then uses a simple moving average to classify the prevailing direction. A bullish or bearish confirmation candle is used to time an entry in the corresponding direction. The described configuration uses a 20-period average, a Doji threshold of 0.3, a five-tick stop distance, and a take-profit target based on a two-to-one reward-to-risk ratio. It also includes an exit on a Doji signal.

The document describes the method and its possible failure modes, including false signals in volatile or ranging markets, lag from the moving average, and a fixed stop that may not suit changing volatility. It gives backtest settings for ETH-USDT on Binance over about a year, but provides no returns, drawdown, trade count, or benchmark. The source logic also leaves important details uncertain: the wick conditions compare prices to the open rather than measuring wick length, and the stated opposite-direction early exit is implemented as a close on any Doji. Performance claims therefore cannot be assessed from the material provided.

Key ideas

• A Doji is defined by comparing the candle body with its total high-to-low range.
• The entry setup combines a Doji with a confirmation candle and price position relative to a simple moving average.
• The described risk plan uses a fixed stop and a take-profit distance tied to the reward-to-risk ratio.
• The source closes positions when a Doji appears, without checking whether it is opposite the position direction.
• The supplied backtest settings do not include performance results, so the strategy's effectiveness cannot be established from this document.

Tags

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