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Strategies / Pattern / Outside Bar Reversal Stop

Outside Bar Reversal Stop

The strategy buys after a large outside bar closes below the prior low, and sells short after one closes above the prior high. Each trade has a 2 ATR stop and exits at the first close in profit.

PatternLong & shortSwingUSD/JPYDaily
n/aProfit factor
234,360Net profit USD
5.24%Win rate
763Trades
-74,840Max drawdown
307Avg trade

Best run of 3. USD/JPY, Daily, spread 1, from run sweeps:2026-10-11-USDJPY-D-opt.tsv:155.

Entry rules, long

  1. The bar is an outside bar: its high is above the prior high and its low is below the prior low.
  2. Its body is more than 2 times the prior bar's body.

Entry rules, short

  1. The bar is an outside bar with a body more than 2 times the prior bar's body, and the close is above the prior high.

Exit rules

  2. A short is covered at market on the first bar that closes below the entry price.
  3. A long stop sits at the signal bar low minus 2 times the 14-period ATR, and a short stop sits at the high plus 2 times the ATR.

Test conditions

PeriodUp to 2026-10-11
InstrumentUSD/JPY, Daily
Spread1 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 tested2026-10-11

Every run

Markets and timeframes tested

MarketTimeframePFTradesWin %NetMax DD
USD/JPYBest runDailyn/a 7635.24234,360 USD-74,840
Nikkei 225Dailyn/a 63876.4918,124 USD-6,700
Dow JonesDailyn/a 50478.178,962 EUR-6,657

Charts

Results by run

Net profitMax drawdown

The code

ProBuilder code, as tested

// ==============================================================
// Outside Bar Reversal Stop
// ProRealAlgos Strategy Library  |  prorealalgos.com
// Type: Pattern
// Direction: Long & short
// Timeframe tested: Daily
// ==============================================================

DEFPARAM CumulateOrders = false

myAtr = AverageTrueRange[14](close)
buffer = myAtr * 2

27 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
  • No profit factor is available, because only sweep results exist for this strategy.
  • Results include the spread only. Commissions and overnight financing are not included.

Questions

About this strategy

Can I run Outside Bar Reversal Stop 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 3 market and timeframe combinations. The best run by trade count was USD/JPY, Daily, with 763 trades.

How large was the drawdown?

The best run had a maximum drawdown of 74,840 USD at the tested position size, against a net result of 234,360 USD.

Does it trade long, short or both?

It trades both long and short.

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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