Smoothed Heikin-Ashi Trend Entries from Three-Bar Patterns

Summary

This trend-following strategy smooths open, high, low, and close prices with a moving average, then derives Heikin-Ashi candles from those values. It enters long after three bullish smoothed candles with consecutively rising closes, and exits on a corresponding three-candle bearish sequence with falling closes. A signal-state rule suppresses repeated entries in the same direction. The moving-average period is configurable, with a published default of 65.

The document explains the signal logic and lists a BTC/USDT futures backtest configuration spanning about a year, using two-day strategy bars and daily base data. It provides no backtest performance figures, so claims of trend capture cannot be assessed from the text. The stated limitations include indicator lag, dependence on only the latest three candles, lack of a stop-loss, and no broad-market filter. Suggested additions include longer-term trend checks, stop management, volume confirmation, and parameter evaluation.

Key ideas

• Smoothed Heikin-Ashi candles are constructed from moving averages of the price fields.
• Long entries require three bullish candles and rising consecutive closes.
• Short-direction signals require three bearish candles and falling consecutive closes, and close the long position.
• The signal-state condition filters repeated entries in the same direction.
• The described system has no stop-loss and may lag at turning points.

Tags

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