Equilibrium Candle Trend Entries, Reversals, and ATR-Based Exits
Summary
The strategy defines an equilibrium level as the midpoint between the highest high and lowest low over a chosen lookback. It uses that level as each synthetic candle’s opening reference and classifies closes above or below it. After a configurable run of candles on one side, the script marks a trend; the first close across equilibrium creates a stop-entry setup in the prior trend’s direction. The order is placed at the signal candle’s extreme and cancelled if it remains unfilled through a specified number of opposite candles.
Optional reverse logic flips the order direction for markets expected to mean-revert. Trade management can use take-profit and stop-loss levels based on an averaged ATR, close positions after a large move away from equilibrium, or respond to an opposing signal. The author describes an example backtest with 4% exposure and 10 points of slippage, but excludes commissions and warns that broker costs and automation delays can differ. The document provides no broader validation, so settings and reported test assumptions limit what can be inferred.
Key ideas
- Equilibrium is the midpoint of the recent high-low range over a configurable lookback.
- A run of closes on one side identifies a trend, and the first close across equilibrium triggers a stop-entry setup.
- Unfilled entry orders can be cancelled after a configured run of opposing candles.
- Reverse logic changes order direction, while ATR-based settings support stops, targets, and overextension exits.
- The example backtest excludes commission and warns that execution conditions vary by broker.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.