Previous-Candle Breakouts with Close-Based Entries and 1:3 Targets

Summary

This strategy enters long when a candle closes above the previous candle’s high and short when it closes below the previous candle’s low. The example implementation compares the current close with the prior high and low from a selected timeframe, set to daily in the source, while the published backtest uses hourly bars with a shorter base period.

For each entry, the stop distance is defined as the prior candle’s full range, and the target distance is three times that amount. The stop and target are placed beyond the prior candle’s low or high according to trade direction. The document gives no performance results; its backtest settings describe only a short BTC futures test period. It also warns that relying on a single timeframe can produce false signals and that stop and target distances may be poorly suited to a given market. Volume, volatility, timeframe, and market-specific parameters are suggested for further evaluation.

Key ideas

• A long signal occurs when the current close exceeds the previous candle’s high.
• A short signal occurs when the current close falls below the previous candle’s low.
• The prior candle’s range sets the stop distance, while the target distance is three times that range.
• The strategy uses a single timeframe signal and may produce false breakouts in changing market conditions.
• The document provides backtest configuration but no reported performance evidence.

Tags

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