Large Candle-Body Momentum Entries with ATR Trailing Stops

Summary

This price-action strategy enters long or short positions when a confirmed candle has a body substantially larger than a recent average body. Candle direction determines trade direction, and a new position is opened only when the strategy is flat. The body-size threshold is adjustable; the script sets its default at four times the computed average. Risk management uses an ATR-based trailing stop: the initial stop is placed relative to average entry price, then moves to follow price while tightening rather than widening.

The source specifies a 14-period ATR and a factor of two, and includes slippage and commission settings, but it provides no backtest results or evidence of profitability. There is also a calculation detail to verify before relying on results: the loop adds 21 candle bodies but divides the total by 20. The script does not describe additional filters for market regime or position sizing, and large candles may reflect either momentum or abrupt volatility.

Key ideas

• A long or short entry follows a confirmed candle whose body exceeds a multiple of the recent average.
• The candle’s direction selects whether the strategy enters long or short.
• An ATR-based trailing stop starts from the average entry price and tightens as price moves favorably.
• The body-average calculation sums 21 bars but divides by 20, which may affect the trigger threshold.
• The document supplies strategy code and cost settings but no performance evidence.

Tags

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