Fractal Support and Low-ATR Entries with Trailing Stops
Summary
This long-only strategy combines a volume-confirmed bullish fractal with a low-volatility filter. It identifies a local low from a five-candle shape and requires the middle candle’s volume to exceed its recent average. The latest confirmed fractal low becomes support; price must be at or above that level for entry. A one-sided test compares fast ATR with slower ATR and accepts an entry when the fast reading is significantly lower under the selected confidence threshold. The author frames low volatility as reduced initial risk and possible consolidation before an advance.
The initial stop distance is twice the 14-period ATR by default, and the stop trails upward using subsequent lows and ATR. Optional profit taking closes one third of the position at each of three risk-based targets, with remaining size managed by the trailing stop. The document explains the logic but provides no performance results. Its statistical filter assumes a distribution and known variance, assumptions not validated here; the strategy is long-only and its outcomes depend on instrument, timeframe, and execution settings.
Key ideas
- Bullish fractals use a local low pattern with above-average volume at the pivot candle.
- Long entries require price to remain above the latest confirmed fractal support.
- A fast-versus-slow ATR test filters for unusually low short-term volatility.
- The initial risk distance and trailing stop are based on ATR and recent lows.
- Partial profit targets are set at three multiples of initial risk, with residual size left to the stop.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.