Wavelet-Efficient Order Flow Hybrid

Family: hybrid · Regime: trending · Complexity: high · Asset classes: FX, Equities, Crypto · Timeframes: H1, H4

Thesis

This strategy hypothesizes that institutional order flow manifests as price-action gaps (FVGs) only when a market trend is 'efficient' (low noise). By using Discrete Wavelet Transforms to isolate the trend component and WaveTrend v3 to confirm volume-based alignment, we can enter during the highest-probability impulsive phases of a trend. Risk management via Auto Pitchforks respects the natural cyclical geometry of price pivots rather than arbitrary pip distances.

Components

• HiLo Activator 02 (regime) — Establishes the macro-trend regime; we only trade in the direction of the HiLo staircase.
• Discrete Wavelet Transform (DWT) (direction) — Filters out high-frequency noise, ensuring the underlying 'approximation' (trend) of the wavelet is aligned with the entry direction.
• Order Block / FVG Detector (entry) — Provides the specific price-action trigger based on institutional 'footprints' (impulsive gaps).
• Volume Weighted Average Price (VWAP) (exit) — Used as a mean-reversion target; exits occur when price regains or loses its volume-weighted 'fair value' against the trend.
• Auto Pitchfork (risk) — Uses market geometry (fractal pivots) to define structural stop-loss levels and dynamic risk-adjusted position sizing.
• WaveTrend v3 [WavesUnchained] (confirmation) — Acts as a high-conviction filter, requiring multi-timeframe alignment and volume profile confirmation before entry.
• Efficiency Ratio (Kaufman) (volatility_filter) — Prevents entering during low-efficiency/sideways chop where OB/FVG signals are often false.

Known failure conditions

• Efficiency Ratio stays below 0.25 for extended periods despite price movement (indicates high-noise/low-conviction).
• Price repeatedly violates Pitchfork median lines without reaching the outer bands, suggesting a breakdown in market geometry.
• DWT trend component produces excessive lag compared to price action in high-volatility reversals.

Explore the full interactive blueprint, parameter ranges and evidence on WOBR StrategyVerse, or generate this strategy as an MT4/MT5 Expert Advisor with QuantMogul AI Engine.