Volatility Compression Entries Using the Smallest Recent Candle

Summary

The document describes a breakout system that looks for a narrow-range candle within a configurable recent window. When a new candle appears, the system compares the high-to-low ranges of the window’s bars. If the newest bar is the smallest, it places buy-stop and sell-stop orders just beyond that candle’s high and low, respectively. Before placing each order, it removes older pending orders of the same type.

The method aims to enter when price leaves a period of short-term compression. The document gives rule descriptions but no backtest, market, timeframe, parameter value, exit method, or performance evidence. It also does not explain how to manage simultaneous triggers, position size, or risk if price reverses after entry, so these details would need to be specified before evaluating or using the strategy.

Key ideas

• The system compares candle ranges across a configurable lookback window when a new candle forms.
• A signal occurs when the newest candle has the smallest high-to-low range in that window.
• The system places pending buy-stop and sell-stop orders beyond the signal candle’s high and low.
• Older pending orders of each type are removed before a replacement order is placed.
• The document does not specify exits, position sizing, or performance results.

Tags

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