Four-Bar Price Reversal Signals with Equity-Based Trade Exits

Summary

This simple strategy uses the average of each bar’s open, high, low, and close as its price series. A long signal occurs when the three most recent prior values rise in sequence after the preceding value was lower; the short rule mirrors this pattern. It enters in the direction of the apparent short-term reversal, without additional trend, volatility, or market filters.

The script closes positions when open profit crosses either a loss threshold tied to account equity or a profit threshold also tied to equity. The accompanying description says it was applied to several cryptocurrency pairs on four-hour charts, but provides no results, sample period, costs, or comparison. The source also uses the same exit expression for both long and short positions, and does not specify conventional price-based stop or target orders. The document is enough to understand the basic signal and exit logic, but not to establish whether it is profitable or robust.

Key ideas

• The signal uses a four-bar sequence in the OHLC average price to identify a short-term turn.
• A rising sequence after a lower value triggers a long, while the mirrored falling pattern triggers a short.
• Exit conditions use open profit thresholds expressed relative to strategy equity.
• The document mentions use on cryptocurrency pairs and four-hour charts but gives no measured performance or trading-cost assumptions.
• The long and short exits share the same equity-based rule, with no conventional price-level stop specified.

Tags

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