Measuring Next-Bar Outcomes After Runs of Same-Color Candles

Summary

This indicator studies whether price tends to rise or fall on the bar after a run of consecutive candles with the same direction. It measures runs from one to twelve candles and simulates a long position entered at the close of the run and exited one candle later. A spread input can be deducted from each simulated result. The output reports winning trades, sample counts, win percentage, cumulative outcome, and average return for each run length and direction.

The CountAll setting determines whether overlapping runs are counted or only runs that begin after an opposite-color candle. The author recommends comparing larger time frames and using a companion graph to inspect whether results persist over time. The document cautions that short time frames can be noisy and slow to calculate. These historical counts are descriptive rather than proof of a predictive edge; results depend on the selected market, period, costs, and run-counting convention. Short-trade outcomes are described as the direct opposite of the simulated long outcomes.

Key ideas

• The tool compares one-bar outcomes following same-color candle runs of up to twelve bars.
• It reports win rate, trade count, cumulative outcome, and average return by run length.
• CountAll controls whether overlapping runs contribute separate observations.
• A spread adjustment can be included in simulated trade outcomes.
• The author recommends larger time frames and checking consistency across periods.

Tags

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