This strategy is taken from Perry Kaufman's book "Trading System and Methods".
You can enter on the direction of the candle, or opposite to it. I find that the opposite tends to yield better results in volatile assets, allowing a better reward to risk ratio. There is no stop loss in this strategy, only a fixed take profit and a time limitation.
Catatan Rilis
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Added the ability to choose the direction of the trades.
@pablo45N I can't answer through the chat since I don't have 5 points of reputation, so I'll try to explain through here. This is Perry Kaufman's explanation, took directly from his book:
"OUTSIDE DAYS AND INSIDE DAYS There are numerous chart patterns that can be profitable if they are properly identified and traded consistently. Unfortunately, any one pattern may not appear very often and traders may become impatient waiting for the opportunities. For others who feel that overall trading success is a combination of small victories, the outside day with an outside close is a good place to start.
Outside Days An outside day has the high and low outside the range of the previous day; that is, the high is higher and the low is lower. An outside close is an outside day with the closing price higher or lower than the prior day's high or low, respectively. This pattern represents a volatile day, often triggered by news, and is clearly resolved in one direction. If the close was in the direction opposite to a recent price move, it is also a key reversal day; however, this method does not attempt to find the current trend. A brief study by Arnold in 1984 showed that this pattern proved profitable for a small sample of currencies, metals, and financials using the following rules:
1. Buy on the close of an outside day if the close is above the prior high; sell if the close is below the prior low. 2. If buying, place a stop-loss just below the low of the outside day; if selling, place the stop just above the high. 3. Close out the position on the close three days after entry (the result of testing from one to five days).
Times have changed, and markets are generally noisier and often more volatile. In the 1970s and perhaps into the early 1980s, this pattern was likely to work, but not since the mid-1980s. However, if you reverse the rules and sell when today's price closes above the previous high on a volatile day, your results are much better. A conditional exit, which includes profit-taking, is likely to improve results. The program TSM Outside Day with an Outside Close is available on the Companion Website. It allows you to test the number of days that the trade is held, plus profit-taking based on the average true range. Results might be improved by removing trades during periods of low volatility because a wide-ranging day that follows a very narrow range may prove to have no forecasting value."
"OUTSIDE DAYS AND INSIDE DAYS
There are numerous chart patterns that can be profitable if they are properly identified and traded consistently. Unfortunately, any one pattern may not appear very often and traders may become impatient waiting for the opportunities. For others who feel that overall trading success is a combination of small victories, the outside day with an outside close is a good place to start.
Outside Days
An outside day has the high and low outside the range of the previous day; that is, the high is higher and the low is lower. An outside close is an outside day with the closing price higher or lower than the prior day's high or low, respectively. This pattern represents a volatile day, often triggered by news, and is clearly resolved in one direction. If the close was in the direction opposite to a recent price move, it is also a key reversal day; however, this method does not attempt to find the current trend. A brief study by Arnold in 1984 showed that this pattern proved profitable for a small sample of currencies, metals, and financials using the following rules:
1. Buy on the close of an outside day if the close is above the prior high; sell if the close is below the prior low.
2. If buying, place a stop-loss just below the low of the outside day; if selling, place the stop just above the high.
3. Close out the position on the close three days after entry (the result of testing from one to five days).
Times have changed, and markets are generally noisier and often more volatile. In the 1970s and perhaps into the early 1980s, this pattern was likely to work, but not since the mid-1980s. However, if you reverse the rules and sell when today's price closes above the previous high on a volatile day, your results are much better. A conditional exit, which includes profit-taking, is likely to improve results. The program TSM Outside Day with an Outside Close is available on the Companion Website. It allows you to test the number of days that the trade is held, plus profit-taking based on the average true range. Results might be improved by removing trades during periods of low volatility because a wide-ranging day that follows a very narrow range may prove to have no forecasting value."