Fractal Momentum Spread-Guard Trader

Family: breakout · Regime: trending · Complexity: medium · Asset classes: FX, Equities, Commodities · Timeframes: H1, H4

Thesis

Market participants create structural barriers (fractals) that, when broken during periods of rising directional strength (ADXR), signal a high-probability trend continuation, provided that liquidity (spread) and volatility (BB) are within functional limits.

Components

• Average Directional Movement Index Rating (ADXR) (regime) — Filters for trending regimes; entry is only permitted when ADXR is above 20, suggesting sufficient momentum to overcome spread costs.
• Candles Overlay Template (direction) — Visualizes and programmatically confirms the 'directional' state based on the current close relative to the fractal break.
• Trend Break Fractal (entry) — Provides the core trigger; entries occur when price breaches the level established by the second of two consecutive fractals.
• Chandelier Exit (exit) — Provides a volatility-adjusted trailing stop to lock in profits while allowing the trend to breathe.
• Spread Monitor (Tick-Level) (risk) — Ensures trade execution only occurs when the maximum observed spread is within acceptable historical norms, preventing slippage from invalidating the edge.
• Bollinger Bands Edge Cases Utility (volatility_filter) — Acts as a 'health check'; if the utility returns 'na' or fails edge-case tests (e.g., zero volatility periods), the entry is blocked.

Known failure conditions

• ADXR remains below 15 for extended periods, indicating a permanent shift to mean-reversion.
• Market spread (Spread_max) consistently exceeds 50% of the ATR, making the risk-reward ratio mathematicaly unviable.
• Frequent 'na' returns from the BB Edge Utility during high-volatility events, suggesting data feed instability.

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