Three setup gates and a session-count clock complete a long bottom

A picture of a low is not yet a setup

Editorial reading: treat a visual bottom as unfinished construction until the same mechanical procedure names three yes-or-no setup gates, the exact fill bar, and a session-count clock that ends the trade without a price target.

The archive writes the long as one mechanical procedure. Entry, abstention, and exit belong in the same coded package so the whole sequence can be tested together.

Three concurrent long-entry gates

A long entry can be written as three checks that must all be true at the same time. The close must exceed the open by a chosen point threshold. The bar's high-low range must exceed a second point threshold. A D-day low must have printed within the last five bars.

The D-day check is true when the lowest low of a D-bar window occurred no more than five bars earlier, or when an N-day low appears inside a five-bar maximum window. That five-bar recency is the depth condition in the setup.

The setup bar is the bar on which every long-entry check first becomes true. Until every check is true, there is no setup bar.

The procedure must name the fill bar

The fill may be taken on the close of the setup bar. The three checks may instead be lagged one bar so the fill occurs on the following close. That one-bar lag is the fill-offset.

The procedure has to state which of those two closes is the fill.

A session-count clock ends the long

After entry, the long can be closed when a user-set number of bars have elapsed since the fill. The holding period then sits in the same procedure as the gates.

That exit is a time-stop. It closes the position after a fixed number of bars since entry rather than at a price objective.

On a daily series the elapsed-bar exit counts trading sessions, not calendar days. Session-count is the number of trading bars since the fill.

One coded exit closes the long when the current bar index equals the entry index plus 23. That is a 23-session time stop.

What the coded package still has to specify

If open prices are unavailable, the prior close can stand in for the open when testing the close-versus-open threshold.

A coded example specified long-only entry and exit and left any short-side rules unspecified.

Point thresholds must be scaled to the market's minimum price increment so a coded point matches a tradable tick.