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Strategies / Momentum / Reversal Pattern With CMO Signal Line

Reversal Pattern With CMO Signal Line

The system buys when a stochastic-based close reversal agrees with a Chande Momentum Oscillator that is above its 13-period weighted average, and sells short when both are bearish. Positions close when the states no longer agree.

MomentumLong & shortSwingUSD/JPYDaily
n/aProfit factor
1,853,960Net profit USD
40.95%Win rate
1,343Trades
-506,330Max drawdown
1,380Avg trade

Best run of 1. USD/JPY, Daily, spread 1, from run sweeps:2026-10-12-USDJPY-D-opt.tsv:40.

Entry rules, long

  1. The close is above the prior close, and the prior close was below the close 2 bars earlier.
  2. The Stochastic %K (14 periods) is below its 3-period SMA and above 50 on the same bar.
  4. When both states are bullish and no long is open, the system buys 1 contract at market.

Entry rules, short

  1. The close is below the prior close, and the prior close was above the close 2 bars earlier.
  2. The Stochastic %K (14 periods) is above its 3-period SMA and below 50 on the same bar.
  4. When both states are bearish and no short is open, the system sells 1 contract short at market.

Exit rules

  2. When they no longer agree, an open short is bought back at market.

Test conditions

PeriodUp to 2026-10-12
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 tested2026-10-12

Every run

Markets and timeframes tested

MarketTimeframePFTradesWin %NetMax DD
USD/JPYBest runDailyn/a 1,34340.951,853,960 USD-506,330

Charts

Results by run

Net profitMax drawdown

The code

ProBuilder code, as tested

// ==============================================================
// Reversal Pattern With CMO Signal Line
// ProRealAlgos Strategy Library  |  prorealalgos.com
// Type: Momentum
// Direction: Long & short
// Timeframe tested: Daily
// ==============================================================

DEFPARAM CumulateOrders = false

ONCE stoch = 50
ONCE posrev = 0
ONCE cmo = 0

hh = highest[14](high)
ll = lowest[14](low)

47 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

WMASMAStochastic
Read this firstKnown weaknesses3 points
  • No profit factor is available, because only sweep results exist for this strategy.
  • It was only tested on USD/JPY, so there is no evidence from other markets.
  • The code sets no stop loss, so a losing trade stays open until an exit signal arrives.

Questions

About this strategy

Can I run Reversal Pattern With CMO Signal Line 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 one combination, USD/JPY, Daily, with 1,343 trades.

How large was the drawdown?

The best run had a maximum drawdown of 506,330 USD at the tested position size, against a net result of 1,853,960 USD.

Does it trade long, short or both?

It trades both long and short.

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See how ProRealAlgos combines strategies like this into one automated portfolio.

The ProRealAlgos community gets the full rules, the complete code and the automated portfolio.

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