Hammer Candle Entries with Fixed Reward and Risk Exits

Summary

This strategy marks two candle shapes as hammer signals and opens a long position when either appears. Its rules use the relationship between candle body and wick lengths; both bullish and bearish candle variants can trigger the same long entry. Position size is calculated as the account equity divided by the closing price, so the order quantity changes with equity and price. The strategy starts with $1,000 of capital.

An exit order sets a fixed reward and risk distance, with defaults of 75 and 200 pennies respectively. The author suggests adjusting these distances for different chart prices and gives larger example settings for higher-priced stocks. The document provides the rules and settings but no backtest results or evidence that the approach is profitable. It does not specify a market, timeframe, or broader trend filter, so the candle definitions and fixed exits would need evaluation across instruments and trading conditions.

Key ideas

• Either of two candle-body and wick conditions can generate a long entry.
• The strategy applies the same long-only action to both candle variants.
• Position size is based on account equity divided by the closing price.
• Profit and loss exits use configurable fixed distances, defaulting to 75 and 200 pennies.
• The document offers no performance results or instrument-specific validation.

Tags

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