Marubozu Candle Strategy with Two-Candle Reversal Exits
Summary
This forex-oriented strategy enters in the direction of a long-bodied Marubozu candle. It defines bullish and bearish patterns as candles whose bodies exceed a recent average body size and whose upper and lower shadows are each no more than a small fraction of the body. The script also marks the patterns and provides alert conditions, making the same rules usable as a visual indicator.
A long position closes when a bullish candle follows two bearish candles; a short position closes when a bearish candle follows two bullish candles. The source sets position sizing to 100 percent of equity and specifies zero commission, though actual trading costs would affect results. The document gives the rule definitions and code but no backtest statistics, market pair, chart timeframe, or evidence that the pattern has predictive value. Performance may vary with market conditions and implementation assumptions.
Key ideas
- A bullish Marubozu is a long-bodied rising candle with very small shadows, while the bearish form is a long-bodied falling candle with similarly small shadows.
- Pattern size is assessed against an exponential average of candle bodies.
- The strategy opens positions in the direction of each qualifying Marubozu pattern.
- Long and short exits use a reversal candle after two candles moving against the position.
- The document supplies rules and source code but no performance evaluation or timeframe specification.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.