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Strategies / Momentum / Displacement Candle Continuation

Displacement Candle Continuation

Watches for a candle whose body exceeds 1.5 ATR(14), then buys a bullish candle within 10 bars that holds above the displacement low. Shorts mirror the setup. Stops sit at the displacement low, with targets at 2 times that risk.

MomentumLong & shortSwingSilver1 hour
1.21Profit factor
50,372Net profit USD
32.65%Win rate
1,905Trades
-12,295Max drawdown
26.44Avg trade

Best run of 8. Silver, 1 hour, spread 2, from run pf:2026-10-05-SILVER-1h.tsv:2.

Entry rules, long

  2. The current bar is bullish (close above open) and its low stays above the displacement low.
  3. The setup has not been used for a trade yet, and more than 10 bars have passed since the last trade.

Entry rules, short

  2. The current bar is bearish (close below open) and its high stays below the displacement high.
  3. The setup has not been used for a trade yet, and more than 10 bars have passed since the last trade.

Exit rules

  2. Targets sit at 2 times the risk distance from the entry price.

Test conditions

PeriodUp to 2026-10-05
InstrumentSilver, 1 hour
Spread2 points
Starting capital1,000,000
CostsSpread only. Commissions and overnight financing are not included.
BarsUp to 200,000 bars, fewer where the instrument has less history
Last tested2026-10-05

Every run

Markets and timeframes tested

MarketTimeframePFTradesWin %NetMax DD
SilverBest run1 hour1.21 1,90532.6550,372 USD-12,295
USD/JPYDailyn/a 42937.3028,720 USD-8,730
Dow Jones1 hourn/a 54536.1519,816 EUR-8,081
US Crude Oil4 hoursn/a 41837.0810,020 EUR-3,817
Brent CrudeDailyn/a 9444.688,244 EUR-6,004
Nasdaq 100Dailyn/a 23631.364,484 EUR-4,262
S&P 500Dailyn/a 28631.122,783 EUR-1,257
Gold30 minn/a 2,84733.231,528 EUR-1,074

Charts

Results by run

Net profitMax drawdown

The code

ProBuilder code, as tested

// ==============================================================
// Displacement Candle Continuation
// ProRealAlgos Strategy Library  |  prorealalgos.com
// Type: Momentum
// Direction: Long & short
// Timeframe tested: 1 hour
// ==============================================================

DEFPARAM CumulateOrders = false

ONCE dispbar = -1
ONCE displow = 0
ONCE disphigh = 0
ONCE bullactive = 0
ONCE bearactive = 0
ONCE lasttrade = -1

myAtr = AverageTrueRange[14](close)

49 more lines: the entry and exit rules.

Setup

How to load it

  1. Copy the code with the copy button on the code block.
  2. In ProRealTime, open a chart of the instrument and timeframe you want to test, then open ProOrder > New trading system and choose "Create with programming".
  3. Paste the code, give the system a name and save it.
  4. Click "Backtest", set your own spread and position size, and run it before you consider trading it live.

Indicators used

ATR
Read this firstKnown weaknesses2 points
  • Results include the spread only. Commissions and overnight financing are not included.
  • The code is published as it was backtested and has not been compiled again since.

Questions

About this strategy

Can I run Displacement Candle Continuation in ProOrder?

Yes. The code is ProBuilder and runs as an automated ProOrder system. Backtest it on your own account with your own spread and position size before trading it live.

Which markets was it tested on?

It was tested on 8 market and timeframe combinations. The best run was Silver, 1 hour, with a profit factor of 1.21 over 1,905 trades.

How large was the drawdown?

The best run had a maximum drawdown of 12,295 USD at the tested position size, against a net result of 50,372 USD.

Does it trade long, short or both?

It trades both long and short.

Related

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Past backtest results do not guarantee future results. This is not financial advice. Curated and maintained by ProRealAlgos. ProRealTime™ is a trademark of ProRealTime SAS. prorealalgos.comStatsDocs