Candle shadows v1
This EA trades based on candlestick shadow (wick) patterns, identifying setups where extended upper or lower shadows signal potential reversals. It enters buy positions when a candle shows a long lower shadow (hammer-like) and sell positions when a candle shows a long upper shadow (shooting star-like). The strategy uses configurable shadow-to-body ratios to qualify signals and applies stop loss/take profit for trade management.
Open the interactive view (equity curve, symbol switch)Key facts
Backtest results (H1, about 1 year)
| Symbol | P&L | Annual | Max DD | Trades | Win rate | Sharpe | Recovery | Losing streak | Per trade | Status |
|---|---|---|---|---|---|---|---|---|---|---|
| EURUSD | +0.02% | +0.01% | 3.46% | 143 | 43.00% | 0.03 | 0.01 | 5 | −$0.22 | Reliable |
| GBPUSD | -7.49% | -6.54% | 8.96% | 142 | 42.60% | -1.11 | -0.84 | 8 | −$5.48 | Reliable |
| USDJPY | -6.72% | -5.87% | 7.79% | 172 | 46.20% | -1.29 | -0.86 | 9 | −$3.84 | Reliable |
| XAUUSD | -100.00% | -100.00% | 100.00% | 33 | 54.50% | -1.51 | -1.00 | 4 | −$331.85 | Account stopped out |
Profitable on 1 of 4 markets with reliable results.
Converted from MQL5 to Python and run with the same rules for every EA. Positions use MT5 lot sizes (100,000 units per FX lot, 100 oz per gold lot) with 1:100 leverage, one order at a time, and a stop-out below 10% of the starting balance. Sharpe is computed from the equity curve. Results marked as unreliable are shown for completeness only.
Month by month
| Market | Months with a gain | Best month | Worst month |
|---|---|---|---|
| EURUSD | 54% | +1.30% 2026-06 | -1.83% 2026-07 |
| GBPUSD | 23% | +5.10% 2026-03 | -4.44% 2026-02 |
| USDJPY | 31% | +2.28% 2026-09 | -2.46% 2026-02 |
| XAUUSD | 25% | +15.50% 2025-11 | -100.00% 2026-02 |
From the backtest equity curve, sampled about every two days; only reliable results.
Blow-up risk: High
- Hit a stop-out in our backtest (equity below 10%) on XAUUSD
High: stopped out in our backtest, or martingale/grid sizing without a stop loss. Elevated: martingale or grid sizing with a stop loss, or several positions at once without a stop loss. What the label means and what we found →
Strategy analysis
The core concept of this strategy is identifying market reversal points using candlestick shadow patterns, where long lower shadows serve as bullish signals and long upper shadows as bearish signals. Entry conditions require that the shadow-to-body ratio of the current candle exceeds a configurable threshold, and the absolute shadow length must also meet a minimum value, ensuring only candles with significantly protruding shadows qualify. Exit conditions rely on pre-set stop loss and take profit levels, where the stop loss is typically placed beyond the shadow extreme and take profit is calculated based on a risk-reward ratio. Position sizing uses either fixed lot sizes or a percentage-of-balance approach configurable by the user. Money management depends on the classic technical analysis logic of shadow reversals, but in trending markets consecutive false signals can lead to multiple losses, and the lack of a trend filter is a notable shortcoming.
Strengths
- Based on classic candlestick shadow reversal patterns with clear, understandable logic suitable for beginners to comprehend and debug
- Dual filtering mechanism using both shadow ratio and minimum shadow pip requirements effectively reduces low-quality signal triggers
- Well-defined stop loss and take profit settings provide a basic risk control framework with quantifiable risk per trade
Weaknesses
- Lacks a trend filter mechanism, causing shadow reversal signals to frequently fail in strong trending markets, leading to consecutive losses
- Does not account for market volatility (e.g., ATR) to dynamically adjust stop loss and take profit, making fixed pip values potentially unsuitable across varying volatility environments
- Missing a new bar check mechanism, which may result in repeated entries on the same candle and unnecessary risk exposure
Possible improvements
- Add a trend filter (e.g., moving average direction or ADX threshold) to only enter on shadow signals against the prevailing trend, avoiding blind reversals during trend continuations
- Introduce ATR-based dynamic stop loss and take profit mechanism that automatically adjusts distances based on current market volatility, improving strategy adaptability across different market conditions
Risk assessment
Overall risk: Medium
- Missing new bar check may cause multiple entries on the same candle, resulting in excessive exposure
- Shadow reversal strategy is prone to consecutive false signals in trending markets without trend filter protection
Evaluation scores
Parameters
| Parameter | Default | Description |
|---|---|---|
ShadowRatio | 2.0 | Minimum wick-to-body ratio threshold |
MinShadowPips | 10 | Minimum wick size in pips |
StopLossPips | 30 | Stop loss in points |
TakeProfitPips | 60 | Take profit in points |
LotSize | 0.1 | Fixed trading lot size |
MagicNumber | 21147 | EA unique magic number identifier |
MaxOpenPositions | 1 | Maximum simultaneous positions |
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Backtests are historical simulations and do not guarantee future results. Not financial advice.