this essence of the particular system is
identification of the moment of creation of a” alteration ” composite candle with the
specified characteristics (candle size from points, shadow arrangement). In the
analysis of Japanese candlesticks, the analogs of these reversal patterns are
“Hammer” (Hammer) and “Hanging Man” (Hanging Man), but in such a system the body
the candle doesn’t have to be small, and the subsequent candle is constructed from multiple candles.
System input parameters:
- Range-sets the highest number of pubs which will participate in the formation of a composite candle.
- minimum – the minimum size of the candle (in points) that is taken to be
review. - shadowbig and shadowsmall – shadow parameters (in fractions of the size of the composite candle).
- Limit, StopLoss and TakeProfit – opening levels, SL and TP, they are set relative to the closing price of the composite candle (in fractions of it
size). - Expiration-designed for
indication of the order lifetime (in bars) (if the transaction is not supposed to be executed by
market price (Limit!=0.0)).
Reversal candlestick patterns are defined by
in the following way.
Sequentially (starting from the last one
the completed candle (with index 1) and up to the number of bars specified by the Range parameter) is plotted
composite candle and its size is checked. If
the size of the resulting candle is greater than the minimum size specified by the Minimum parameter, then further
there is a check of the criteria for the reversal of the composite candle, which
it is carried out using the analysis of candle shadows.
[spoiler title=”Read More…”]
The strength of bears is characterized by size
the upper shadow of the candle, the strength of the bulls-the size of the lower shadow.
- To confirm a bearish reversal
the movement (predominance of bulls) requires the size of the lower shadow to be larger
shadowbig values, when
at the same time, the size of the upper shadow (bear force) must be less than the value of the shadowsmall input parameter. In this case, it is executed
bearish reversal criterion (increases the probability of price movement
up). - To confirm the reversal of the bullish movement
(bear predominance) requires that the size of the upper shadow is larger
shadowbig values and when
at the same time, the size of the upper shadow (the strength of the bulls) must be less than the value of the shadowsmall input parameter. In
this case, the bullish reversal criterion is met (increases
probability of price movement down).
In addition to
For” reversal ” candle models, it is possible to work in the following mode:
trading “on the breakout”, this mode corresponds to negative values
the Limit parameter.
Depending on the value of the Limit parameter
there are three different ways to enter the market:
- Limit>0. The entry will be made on a correction at a price better than the market price (will be exposed
pending Buy Limit and Sell Limit orders depending on the direction
log in) - Limit<0. The input will be it is made on the continuation of the price movement in the expected direction at a price worse than the current market price (pending Buy Stop and Sell Stop orders will be placed depending on the direction of entry).
- Limit=0. Entry will be made at the current market price.
Depending on the value of the Limit parameter
there are three different ways to enter the market:
[/spoiler]