Strategies / Pattern / Hammer And Hanging Man Reversal

Hammer And Hanging Man Reversal

It buys on a hammer candle, a small body bar with a long lower wick and a green close, and sells short on the mirror hanging man. Any open position closes once 26 bars have passed since entry.

PatternLong & shortIntradayDow Jones30 min

n/aProfit factor

10,266Net profit EUR

48.27%Win rate

1,355Trades

-7,845Max drawdown

7.58Avg trade

Best run of 6. Dow Jones, 30 min, spread 3, from run sweeps:2026-10-12-DOW30-30m-opt.tsv:13.

Entry rules, long

The lower wick is at least as long as the body, and the upper wick is no longer than the body.
The close is above the open.
Signals are checked only after bar 1 and only when no long position is open.

Entry rules, short

The close is below the open.
Signals are checked only after bar 1 and only when no short position is open.

Exit rules

A short position closes at market once 26 bars have passed since its entry bar.

Test conditions

Period	Up to 2026-10-12
Instrument	Dow Jones, 30 minutes
Spread	3 points
Starting capital	1,000,000
Costs	Spread only. Commissions and overnight financing are not included.
Bars	Up to 200,000 bars, fewer where the instrument has less history
Last tested	2026-10-12

Every run

Markets and timeframes tested

Market	Timeframe	PF	Trades	Win %	Net	Max DD
Dow JonesBest run	30 min	n/a	1,355	48.27	10,266 EUR	-7,845
Nikkei 225	4 hours	n/a	486	46.30	17,044 USD	-10,859
DAX 40	Daily	n/a	192	47.92	13,131 EUR	-6,382
US Crude Oil	4 hours	n/a	322	49.69	6,407 EUR	-3,986
Gold	4 hours	n/a	494	51.62	1,247 EUR	-901
Gold	Daily	n/a	210	58.10	1,059 EUR	-867

Charts

Results by run

Net profitMax drawdown

The code

ProBuilder code, as tested

// ==============================================================
// Hammer And Hanging Man Reversal
// ProRealAlgos Strategy Library  |  prorealalgos.com
// Type: Pattern
// Direction: Long & short
// Timeframe tested: 30 minutes
// ==============================================================

DEFPARAM CumulateOrders = false

ONCE entrybar = 0
ONCE lastpos = 0

body = ABS(close - open)
height = high - low
lower = MIN(open, close) - low
upper = high - MAX(open, close)

28 more lines: the entry and exit rules.

Setup

How to load it

Copy the code with the copy button on the code block.
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".
Paste the code, give the system a name and save it.
Click "Backtest", set your own spread and position size, and run it before you consider trading it live.

Read this firstKnown weaknesses3 points

No profit factor is available, because only sweep results exist for this strategy.
The maximum drawdown of 7,845 EUR is large next to the net profit of 10,266 EUR.
The code sets no stop loss, so a losing trade stays open until an exit signal arrives.

Questions

About this strategy

Can I run Hammer And Hanging Man Reversal 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 6 market and timeframe combinations. The best run by trade count was Dow Jones, 30 minutes, with 1,355 trades.

How large was the drawdown?

The best run had a maximum drawdown of 7,845 EUR at the tested position size, against a net result of 10,266 EUR.

Does it trade long, short or both?

It trades both long and short.

Turtle Trade

Best run on the same market, Dow Jones.

2.42 PF · 6,324 trades

Breakout Reversal

Also a pattern strategy.

n/a PF · 459 trades

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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.com Stats Docs