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Three Black Crows Strategy

Three Black Crows is the bearish counterpart to Three White Soldiers, consisting of three long down candles after an advance. The pattern suggests that sellers have seized control as each close lands near the session low.

Testing indicates an average annual return of about 178%. It performs best in the stocks market.

This strategy initiates a short position once the third crow appears, expecting momentum to continue lower. It can also be used to exit longs that were opened by other systems if the pattern forms at resistance.

Risk is managed with a tight percent stop above the pattern high, and trades exit if price closes back above that level.

Details

  • Entry Criteria: pattern match
  • Long/Short: Both
  • Exit Criteria: stop-loss or opposite signal
  • Stops: Yes, percent based
  • Default Values:
    • CandleType = 15 minute
    • StopLoss = 2%
  • Filters:
    • Category: Pattern
    • Direction: Both
    • Indicators: Candlestick
    • Stops: Yes
    • Complexity: Intermediate
    • Timeframe: Intraday
    • Seasonality: No
    • Neural networks: No
    • Divergence: No
    • Risk level: Medium
using System;
using System.Collections.Generic;

using Ecng.Common;

using StockSharp.Algo.Indicators;
using StockSharp.Algo.Strategies;
using StockSharp.BusinessEntities;
using StockSharp.Messages;

namespace StockSharp.Samples.Strategies;

/// <summary>
/// Three Black Crows strategy.
/// Enters short when three consecutive bearish candles with falling closes are detected.
/// Enters long when three consecutive bullish candles with rising closes are detected.
/// Uses SMA for exit confirmation.
/// Uses cooldown to control trade frequency.
/// </summary>
public class ThreeBlackCrowsStrategy : Strategy
{
	private readonly StrategyParam<int> _maLength;
	private readonly StrategyParam<DataType> _candleType;
	private readonly StrategyParam<int> _cooldownBars;

	private ICandleMessage _candle1;
	private ICandleMessage _candle2;
	private int _cooldown;

	/// <summary>
	/// MA period for exit.
	/// </summary>
	public int MaLength
	{
		get => _maLength.Value;
		set => _maLength.Value = value;
	}

	/// <summary>
	/// Candle type.
	/// </summary>
	public DataType CandleType
	{
		get => _candleType.Value;
		set => _candleType.Value = value;
	}

	/// <summary>
	/// Cooldown bars.
	/// </summary>
	public int CooldownBars
	{
		get => _cooldownBars.Value;
		set => _cooldownBars.Value = value;
	}

	/// <summary>
	/// Constructor.
	/// </summary>
	public ThreeBlackCrowsStrategy()
	{
		_maLength = Param(nameof(MaLength), 20)
			.SetRange(10, 50)
			.SetDisplay("MA Length", "Period of SMA for exit", "Indicators");

		_candleType = Param(nameof(CandleType), TimeSpan.FromMinutes(1).TimeFrame())
			.SetDisplay("Candle Type", "Type of candles to use", "General");

		_cooldownBars = Param(nameof(CooldownBars), 500)
			.SetRange(1, 1000)
			.SetDisplay("Cooldown Bars", "Bars to wait between trades", "General");
	}

	/// <inheritdoc />
	public override IEnumerable<(Security sec, DataType dt)> GetWorkingSecurities()
	{
		return [(Security, CandleType)];
	}

	/// <inheritdoc />
	protected override void OnReseted()
	{
		base.OnReseted();
		_candle1 = null;
		_candle2 = null;
		_cooldown = default;
	}

	/// <inheritdoc />
	protected override void OnStarted2(DateTime time)
	{
		base.OnStarted2(time);

		_candle1 = null;
		_candle2 = null;
		_cooldown = 0;

		var sma = new SimpleMovingAverage { Length = MaLength };

		var subscription = SubscribeCandles(CandleType);
		subscription
			.Bind(sma, ProcessCandle)
			.Start();

		var area = CreateChartArea();
		if (area != null)
		{
			DrawCandles(area, subscription);
			DrawIndicator(area, sma);
			DrawOwnTrades(area);
		}
	}

	private void ProcessCandle(ICandleMessage candle, decimal smaValue)
	{
		if (candle.State != CandleStates.Finished)
			return;

		if (!IsFormedAndOnlineAndAllowTrading())
			return;

		var prev2 = _candle1;
		var prev1 = _candle2;
		_candle1 = _candle2;
		_candle2 = candle;

		if (prev2 == null || prev1 == null)
			return;

		if (_cooldown > 0)
		{
			_cooldown--;
			return;
		}

		// Three Black Crows: 3 bearish candles with falling closes
		var threeBlack =
			prev2.ClosePrice < prev2.OpenPrice &&
			prev1.ClosePrice < prev1.OpenPrice &&
			candle.ClosePrice < candle.OpenPrice &&
			prev1.ClosePrice < prev2.ClosePrice &&
			candle.ClosePrice < prev1.ClosePrice;

		// Three White Soldiers: 3 bullish candles with rising closes
		var threeWhite =
			prev2.ClosePrice > prev2.OpenPrice &&
			prev1.ClosePrice > prev1.OpenPrice &&
			candle.ClosePrice > candle.OpenPrice &&
			prev1.ClosePrice > prev2.ClosePrice &&
			candle.ClosePrice > prev1.ClosePrice;

		if (Position == 0 && threeBlack)
		{
			SellMarket();
			_cooldown = CooldownBars;
		}
		else if (Position == 0 && threeWhite)
		{
			BuyMarket();
			_cooldown = CooldownBars;
		}
		else if (Position < 0 && candle.ClosePrice > smaValue)
		{
			BuyMarket();
			_cooldown = CooldownBars;
		}
		else if (Position > 0 && candle.ClosePrice < smaValue)
		{
			SellMarket();
			_cooldown = CooldownBars;
		}
	}
}