Double Inside-Bar Breakouts Filtered by a Moving Average

Summary

This strategy looks for a two-bar inside pattern within a mother candle and uses a moving average to choose direction. When the pattern is confirmed, a close above the selected average permits a buy-stop near the second inside bar’s high; a close below it permits a sell-stop near that bar’s low. The source defaults to a 45-period Hull moving average, but allows several average types. Stops and profit targets can be based on ATR or fixed distances, with the ATR setup using a 50-period ATR multiplied by 2.5 and a target set at twice the stop distance. Position size can also be calculated from a stated account-risk percentage.

The document frames the pattern as a breakout signal aligned with trend, while noting that ranging markets, false average signals, and tight stops can cause losses. It suggests testing parameters and adding filters for market conditions, sessions, or instruments. Backtest settings cover BTC/USDT futures for December 2023, but no results are reported; the stated advantages are not supported by performance statistics.

Key ideas

• The setup identifies two inside bars contained within the range of a mother candle.
• A moving average determines direction, and stop orders are placed near the second inside bar’s high or low.
• The source offers ATR-based or fixed stops and calculates the target from the selected stop distance.
• Risk-based sizing is available as an option, alongside date and session filters.
• The document gives a one-month BTC/USDT futures backtest period but reports no performance results.

Tags

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