Multi Candlestick Pattern Based Triple Strike Quantitative Trading Strategy

Pine ScriptBreakout Mean reversion Trend following ATR

Author: ianzeng123
Complexity: Intermediate · 180 lines
Parameters: 0
Backtest bar: 1d · swing
Tested on: ETH/USDT · spot

Jump to code View in vault Original on FMZ

Overview

This is a quantitative trading strategy based on the Three Line Strike and Engulfing Pattern. This strategy captures the turning point of the market trend by identifying the breakthrough reversal candlestick after three consecutive candlestick patterns, and combines multiple technical indicators to make trading decisions. The strategy designs a complete signal identification system and risk control mechanism, and provides highly customizable parameter settings.

Strategy Principle

The core logic of the strategy is based on two main candlestick patterns:

Triple strike pattern: Judge the trend reversal by identifying the reversal candlestick after three consecutive candlesticks in the same direction. The bullish pattern consists of three consecutive falling red candlesticks followed by a larger green engulfing candlestick; the bearish pattern consists of three consecutive rising green candlesticks followed by a larger red engulfing candlestick.
Engulfing pattern: A separate large engulfing candlestick also serves as an auxiliary signal. The strategy identifies the engulfing pattern by calculating the size of the entity between the current candlestick and the previous candlestick.

Strategy Advantages

Signal identification accuracy: The strategy uses strict mathematical calculations to determine candlestick patterns and employs multiple condition filters to ensure signal quality.
Perfect risk control: risk parameters such as initial capital and position ratio are set, and repeated entry is prohibited.
Highly customizable: Offers a wide range of parameter settings that can be optimized according to different market characteristics and trading needs.
Visualization support: Provides clear graphical markers and hints, making analysis and monitoring easier.

Strategy Risks

Market condition dependency: may generate excessive false signals in a sideways market.
Slippage Impact: The entry point of a large engulfed candlestick may be affected by a significant slippage.
Delay risk: Pattern recognition requires multiple candlesticks to complete, which may miss the best entry timing.

Strategy optimization direction

Introduce volume indicators: use volume changes to filter signal quality.
Optimize stop-loss settings: dynamically adjust the stop-loss position based on ATR or volatility.
Add trend filtering: use a moving average system to judge the overall trend.
Improve exit mechanism: design more flexible profit-taking conditions.

Summary

This strategy captures important turning points in the market through systematic technical analysis methods and has a strong theoretical foundation and practical value. Through parameter optimization and risk control improvement, it can be used as an important part of a robust trading system. The modular design of the strategy also provides a good foundation for further optimization.

Overview

This is a quantitative trading strategy based on Three Line Strike and Engulfing patterns. The strategy captures market turning points by identifying breakthrough reversal candlesticks following three consecutive candles, combining multiple technical indicators for trading decisions. It features a complete signal detection system and risk control mechanism, with highly customizable parameter settings.

Strategy Principle

The core logic is based on two main candlestick patterns:

Three Line Strike Pattern: Identifies trend reversals through three consecutive same-direction candles followed by a reversal candle. Bullish pattern consists of three consecutive red candles followed by a large green engulfing candle; bearish pattern consists of three consecutive green candles followed by a large red engulfing candle.
Engulfing Pattern: Large single engulfing candles serve as auxiliary signals. The strategy identifies engulfing patterns by comparing the body size of current and previous candles.

Strategy Advantages

Precise Signal Identification: Uses strict mathematical calculations to judge candlestick patterns, ensuring signal quality through multiple condition filtering.
Comprehensive Risk Control: Includes risk parameters like initial capital and position sizing, with pyramiding prevention.
Highly Customizable: Offers rich parameter settings for optimization according to different market characteristics and trading needs.
Visual Support: Provides clear graphical markers and alert messages for analysis and monitoring.

Strategy Risks

Market Environment Dependency: May generate excessive false signals in ranging markets.
Slippage Impact: Entry points for large engulfing candles may be subject to significant slippage.
Delay Risk: Pattern recognition requires multiple candles, potentially missing optimal entry points.

Optimization Directions

Incorporate Volume Indicators: Filter signal quality by combining volume changes.
Optimize Stop Loss Settings: Dynamically adjust stop loss positions based on ATR or volatility.
Add Trend Filtering: Implement moving average systems to judge overall trend.
Improve Exit Mechanism: Design more flexible profit-taking conditions.

Summary

The strategy captures important market turning points through systematic technical analysis, with strong theoretical foundation and practical value. Through parameter optimization and risk control refinement, it can serve as an important component of a robust trading system. The modular design also provides a good foundation for further optimization.

Source Pine Script

/*backtest
start: 2024-03-09 18:40:00
end: 2025-02-19 08:00:00
period: 1d
basePeriod: 1d
exchanges: [{"eid":"Binance","currency":"ETH_USDT"}]
*/

// Copyright ...
// Based on the TMA Overlay by Arty, converted to a simple strategy example.
// Pine Script v5

//@version=5
strategy(title='3 Line Strike [TTF] - Strategy',
     shorttitle='3LS Strategy [TTF]',
     overlay=true,
     initial_capital=100000,
     default_qty_type=strategy.percent_of_equity,
     default_qty_value=100,
     pyramiding=0)

// -----------------------------------------------------------------------------
//                               INPUTS
// -----------------------------------------------------------------------------

//
// ### 3 Line Strike
//
showBear3LS = input.bool(title='Show Bearish 3 Line Strike', defval=true, group='3 Line Strike',
     tooltip="Bearish 3 Line Strike (3LS-Bear) = 3 green candles followed by a large red candle (engulfing).")
showBull3LS = input.bool(title='Show Bullish 3 Line Strike', defval=true, group='3 Line Strike',
     tooltip="Bullish 3 Line Strike (3LS-Bull) = 3 red candles followed by a large green candle (engulfing).")
showMemeChars = input.bool(title="Plot 3 Line Strike meme symbols", defval=false, group="3 Line Strike")

//
//### Engulfing Candles
//
showBearEngulfing= input.bool(title='Show Bearish Big Candles', defval=false, group='Big Candles')
showBullEngulfing= input.bool(title='Show Bullish Big Candles', defval=false, group='Big Candles')

//
//### Alerts
//
void = input.bool(title="(Info) Alerts are based on detected signals.", defval=true)

// -----------------------------------------------------------------------------
//                          HELPER FUNCTIONS
// -----------------------------------------------------------------------------

// Function: Get the 'color' of the candle: -1 = red, 0 = doji, +1 = green
getCandleColorIndex(barIndex) =>
    int ret = na
    if (close[barIndex] > open[barIndex])
        ret := 1
    else if (close[barIndex] < open[barIndex])
        ret := -1
    else
        ret := 0
    ret

// Function: Check if the candle is engulfing (based on the body size of the candles)
isEngulfing(checkBearish) =>
    // Size of the previous candle
    sizePrevCandle = close[1] - open[1]
    // Size of the current candle
    sizeCurrentCandle = close - open
    isCurrentLargerThanPrevious = math.abs(sizeCurrentCandle) > math.abs(sizePrevCandle)
    
    // Bearish / Bullish division
    if checkBearish
        // Bearish engulfing: previous green, current larger red
        isGreenToRed = (getCandleColorIndex(0) < 0) and (getCandleColorIndex(1) > 0)
        isCurrentLargerThanPrevious and isGreenToRed
    else
        // Bullish engulfing: previous red, current larger green
        isRedToGreen = (getCandleColorIndex(0) > 0) and (getCandleColorIndex(1) < 0)
        isCurrentLargerThanPrevious and isRedToGreen

// Simplified calls for bullish/bearish engulfing
isBearishEngulfing() => isEngulfing(true)
isBullishEngulfing() => isEngulfing(false)

// Function: 3 consecutive candles of one color followed by the opposite engulfing candle
// 3 Line Strike - Bearish
is3LSBear() =>
    // Three consecutive green candles?
    is3LineSetup = (getCandleColorIndex(1) > 0) and (getCandleColorIndex(2) > 0) and (getCandleColorIndex(3) > 0)
    // Followed by Bearish engulfing
    is3LineSetup and isBearishEngulfing()

// 3 Line Strike - Bullish
is3LSBull() =>
    // Three consecutive red candles?
    is3LineSetup = (getCandleColorIndex(1) < 0) and (getCandleColorIndex(2) < 0) and (getCandleColorIndex(3) < 0)
    // Followed by Bullish engulfing
    is3LineSetup and isBullishEngulfing()

// -----------------------------------------------------------------------------
//                             SIGNALS
// -----------------------------------------------------------------------------

// ### 3 Line Strike
is3LSBearSig = is3LSBear()
is3LSBullSig = is3LSBull()

// Meme icons vs. standard shapes
plotchar(showBull3LS and showMemeChars ? is3LSBullSig : na, char="?", color=color.rgb(0, 255, 0, 0),
         location=location.belowbar, size=size.tiny, text='3LS-Bull', title='3 Line Strike Up (Meme Icon)', editable=false)
plotchar(showBear3LS and showMemeChars ? is3LSBearSig : na, char="?", color=color.rgb(255, 0, 0, 0),
         location=location.abovebar, size=size.tiny, text='3LS-Bear', title='3 Line Strike Down (Meme Icon)', editable=false)

plotshape(showBull3LS and not showMemeChars ? is3LSBullSig : na, style=shape.triangleup,
         color=color.green, location=location.belowbar, size=size.small, text='3LS-Bull', title='3 Line Strike Up')
plotshape(showBear3LS and not showMemeChars ? is3LSBearSig : na, style=shape.triangledown,
         color=color.red, location=location.abovebar, size=size.small, text='3LS-Bear', title='3 Line Strike Down')

// ### Engulfing Candles
isBullEngulfingSig = isBullishEngulfing()
isBearEngulfingSig = isBearishEngulfing()

plotshape(showBullEngulfing ? isBullEngulfingSig : na, style=shape.triangleup,
         location=location.belowbar, color=color.new(color.green,0), size=size.tiny, title='Big Candle Up')
plotshape(showBearEngulfing ? isBearEngulfingSig : na, style=shape.triangledown,
         location=location.abovebar, color=color.new(color.red,0), size=size.tiny, title='Big Candle Down')

// -----------------------------------------------------------------------------
//                               ALERTS
// -----------------------------------------------------------------------------

// 3LS - "Old" alertcondition + "New" alert() (based on what people use)
alertcondition(showBull3LS and is3LSBullSig, title='Bullish 3 Line Strike',
     message='{{exchange}}:{{ticker}} {{interval}} - Bullish 3 Line Strike')
alertcondition(showBear3LS and is3LSBearSig, title='Bearish 3 Line Strike',
     message='{{exchange}}:{{ticker}} {{interval}} - Bearish 3 Line Strike')

if (showBull3LS and is3LSBullSig)
    m = syminfo.tickerid + ' ' + timeframe.period + ' - Bullish 3 Line Strike'
    alert(message=str.tostring(m), freq=alert.freq_once_per_bar_close)

if (showBear3LS and is3LSBearSig)
    m = syminfo.tickerid + ' ' + timeframe.period + ' - Bearish 3 Line Strike'
    alert(message=str.tostring(m), freq=alert.freq_once_per_bar_close)

// Engulfing - "Old" alertcondition + "New" alert()
alertcondition(showBullEngulfing and isBullEngulfingSig, title='Bullish Engulfing',
     message='{{exchange}}:{{ticker}} {{interval}} - Bullish candle engulfing previous candle')
alertcondition(showBearEngulfing and isBearEngulfingSig, title='Bearish Engulfing',
     message='{{exchange}}:{{ticker}} {{interval}} - Bearish candle engulfing previous candle')

if (showBullEngulfing and isBullEngulfingSig)
    m = syminfo.tickerid + ' ' + timeframe.period + ' - Bullish candle engulfing previous candle'
    alert(message=str.tostring(m), freq=alert.freq_once_per_bar_close)

if (showBearEngulfing and isBearEngulfingSig)
    m = syminfo.tickerid + ' ' + timeframe.period + ' - Bearish candle engulfing previous candle'
    alert(message=str.tostring(m), freq=alert.freq_once_per_bar_close)

// -----------------------------------------------------------------------------
//                          STRATEGY ENTRY ORDERS
// -----------------------------------------------------------------------------
//
// Logic for entering trades. If display is enabled and a signal is detected, a trade will be entered.
//
// 3 Line Strike
if (showBull3LS and is3LSBullSig)
    strategy.entry("3LS_Bull", strategy.long, comment="3LS Bullish")

if (showBear3LS and is3LSBearSig)
    strategy.entry("3LS_Bear", strategy.short, comment="3LS Bearish")

// Engulfing
if (showBullEngulfing and isBullEngulfingSig)
    strategy.entry("BullEngulf", strategy.long, comment="Bullish Engulfing")

if (showBearEngulfing and isBearEngulfingSig)
    strategy.entry("BearEngulf", strategy.short, comment="Bearish Engulfing")

//
// End of script

Published by ianzeng123 on the FMZ strategy square · last modified 2025-02-27. Collected in the Quant Trading Vault. Unvalidated research: re-test with your own data and costs before trusting it.

Build this with AgenKit

A spec is not a trading system. Paste this into your coding agent and AgenKit runs a specialist team — architecture, test-first build, risk gates, review — with paper trading on by default.

in Claude Code, Cursor, Codex & 4 more

/agenkit build a production-grade trading bot with a backtest engine, risk controls and paper trading by default from strategies/Multi-Candlestick-Pattern-Based-Triple-Strike-Quantitative-Trading-Strategy.md

npx agenkit install engineering-kit in your project
Paste the command into your agent and approve each phase
Get tests, backtest, risk controls and a paper-trading switch

Get AgenKit How /agenkit works

Understand it first

Before you run this, read the lesson behind the idea and how to backtest it honestly. Specs like this one are the survivors of an unknown number of trials; deflate their results accordingly.

Overview

Strategy Principle

Strategy Advantages

Strategy Risks

Strategy optimization direction

Summary

Overview

Strategy Principle

Strategy Advantages

Strategy Risks

Optimization Directions

Summary

Source Pine Script

Build this with AgenKit

Understand it first

Related specs