Strategies / Pattern / Three Candle Reversal Long

Three Candle Reversal Long

A long-only pattern that buys after two bearish candles followed by a bullish candle with a solid body. The stop sits just below the signal candle's low, and the target is twice the stop distance.

PatternLong onlyIntradayDow Jones30 min

n/aProfit factor

7,547Net profit EUR

30.93%Win rate

4,287Trades

-4,062Max drawdown

1.76Avg trade

Best run of 5. Dow Jones, 30 min, spread 3, from run sweeps:2026-10-07-DOW30-30m-opt.tsv:10.

Entry rules, long

The candle two bars ago is bearish, with close below open.
The previous candle is also bearish, with close below open.
The stop is placed a tiny buffer below the signal candle's low.

Exit rules

The profit target is twice the stop distance.
There is no reversal exit; positions close only at the stop or target.

Test conditions

Period	Up to 2026-10-07
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	2026-10-07

Every run

Markets and timeframes tested

Market	Timeframe	PF	Trades	Win %	Net	Max DD
Dow JonesBest run	30 min	n/a	4,287	30.93	7,547 EUR	-4,062
Nikkei 225	4 hours	n/a	1,382	31.04	15,833 USD	-13,158
Dow Jones	Daily	n/a	761	34.69	15,517 EUR	-8,781
Nasdaq 100	4 hours	n/a	1,770	27.18	6,705 EUR	-4,077
S&P 500	Daily	n/a	777	29.86	1,645 EUR	-822

Charts

Results by run

Net profitMax drawdown

The code

ProBuilder code, as tested

// ==============================================================
// Three Candle Reversal Long
// ProRealAlgos Strategy Library  |  prorealalgos.com
// Type: Pattern
// Direction: Long only
// Timeframe tested: 30 minutes
// ==============================================================

DEFPARAM CumulateOrders = false

body = abs(close - open)
rng = high - low
bodyratio = 0

16 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 weaknesses2 points

No profit factor is available, because only sweep results exist for this strategy.
The maximum drawdown of 4,062 EUR is large next to the net profit of 7,547 EUR.

Questions

About this strategy

Can I run Three Candle Reversal Long 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 5 market and timeframe combinations. The best run by trade count was Dow Jones, 30 minutes, with 4,287 trades.

How large was the drawdown?

The best run had a maximum drawdown of 4,062 EUR at the tested position size, against a net result of 7,547 EUR.

Does it trade long, short or both?

It only takes long trades.

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

Get the full rules, the complete code and the ProRealAlgos portfolio as a member.

Copy trading on US indices is available to ProRealAlgos members as spots open.

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