Hanging Man
BearishReversalBeginnerA hammer at the top of a rally. Sellers showed up; a close under its low proves it.
Verdict: SkipBitcoin 4H: 1 trades, won 0%, avg trade −1.8% vs random day −0.1% (too few trades to judge). Backtest
Price has been rising for a while. Buyers are comfortable.
step 1/6
Trade rules
| Direction | Short (sell) |
|---|---|
| Entry | After an advance, a candle CLOSES below the hanging man's low (the bottom of its wick) within 3 candles. |
| Cancelled if | Price trades above the hanging man's high before that close. |
| Target | 2x the candle, projected from the breakout |
3 common mistakes
- Shorting the candle itself: by the close, buyers had actually won that candle.
- Using it in a sideways market: it only means something after a clear rise, at a new high.
- Setting the stop under the body instead of above the high, the level that cancels the idea.
Backtest
same rules every time · equal size · no fees · method| Market | Trades | Won | Avg trade | Random day |
|---|---|---|---|---|
| Bitcoin · 4H · 2017-2026 · too few trades to judge | 1 | 0% | −1.79% | −0.05% |
| US large caps (50) · 1D · 2016-2026 | 50 | 52% | −0.05% | −0.34% |
Verdict: SkipLost money on average on US large caps. Bitcoin had too few signals to judge.
pattern −2.7%random −17%