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Strategies / Mean reversion / Stretched Dip Reversion

Stretched Dip Reversion

Buys a green candle after 2 or more lower closes when price is 0.5 ATR below its 5-period EMA but above the 200-period EMA. Exits at the 5-period EMA or after 10 bars in the trade.

Mean reversionLong onlySwingDAX 40Daily
n/aProfit factor
899Net profit EUR
65.00%Win rate
40Trades
-604Max drawdown
22.47Avg trade

Best run of 22. DAX 40, Daily, spread 3, from run sweeps:2026-10-03-DAX40-D-opt.tsv:26.

Entry rules, long

  1. Close is above the 200-period EMA.
  3. There are at least 2 consecutive lower closes, ending on this bar.
  4. The candle is green (close above open).

Exit rules

  2. Or the trade has been open for 10 bars.
  3. A protective stop sits 3 times the 14-bar average true range from the entry price.

Test conditions

PeriodUp to 2026-10-03
InstrumentDAX 40, Daily
Spread3 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 tested2026-10-03

Every run

Markets and timeframes tested

MarketTimeframePFTradesWin %NetMax DD
DAX 40Best runDailyn/a 4065.00899 EUR-604
SilverDailyn/a 1855.563,771 USD-914
Silver1 hourn/a 2161.901,375 USD-278
Nasdaq 100Dailyn/a 1675.001,136 EUR-304
Nikkei 2254 hoursn/a 785.71918 USD-414
Brent CrudeDailyn/a 666.67689 EUR-580
Dow Jones4 hoursn/a 580.00587 EUR-258
Silver10 minn/a 2556.00371 USD-352
Dow Jones30 minn/a 1275.00363 EUR-186
DAX 401 hourn/a 3281.25345 EUR-117
Nasdaq 1004 hoursn/a 1080.00339 EUR-139
US Crude Oil4 hoursn/a 683.33275 EUR-109
Nasdaq 10010 minn/a 1172.73121 EUR-16.90
GoldDailyn/a 3073.33113 EUR-72.30
S&P 500Dailyn/a 1181.8284.91 EUR-82.72
US Crude Oil1 hourn/a 1770.5978.30 EUR-66.70
FTSE 10015 minn/a 3863.1640.20 EUR-20.50
Gold10 minn/a 862.5031.80 EUR-4.70
S&P 50010 minn/a 1478.5723.46 EUR-7.01
Gold5 minn/a 1275.0016.50 EUR-3.80
Gold2 minn/a 1662.5014.90 EUR-14.00
S&P 50015 minn/a 2166.6714.54 EUR-12.41

Charts

Results by run

Top 10 of 22 runs. The full list is in the table above.

Net profitMax drawdown

The code

ProBuilder code, as tested

// ==============================================================
// Stretched Dip Reversion
// ProRealAlgos Strategy Library  |  prorealalgos.com
// Type: Mean reversion
// Direction: Long only
// Timeframe tested: Daily
// ==============================================================

DEFPARAM CumulateOrders = false

ONCE downrun = 0
ONCE held = 0

mean = ExponentialAverage[5](close)
trend = ExponentialAverage[200](close)
myAtr = AverageTrueRange[14](close)

26 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

ATREMA
Read this firstKnown weaknesses3 points
  • No profit factor is available, because only sweep results exist for this strategy.
  • The best run has only 40 trades, which is a small sample to judge it on.
  • The maximum drawdown of 604 EUR is large next to the net profit of 899 EUR.

Questions

About this strategy

Can I run Stretched Dip Reversion 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 22 market and timeframe combinations. The best run by trade count was DAX 40, Daily, with 40 trades.

How large was the drawdown?

The best run had a maximum drawdown of 604 EUR at the tested position size, against a net result of 899 EUR.

Does it trade long, short or both?

It only takes long trades.

Related

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Heikin Ashi Color Flip

Best run on the same market, DAX 40.

1.12 PF · 3,692 trades

ATR Band

Also a mean reversion strategy.

10.31 PF · 53 trades

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