The Barking Rat Reversions

Mean Reversion with Multi-Layered Precision
The Barking Rat Reversions is a short-term mean reversion strategy tailored for high-volatility markets. It combines several well-established technical tools in a configuration to identify overextended price movements likely to revert toward equilibrium. The goal is to isolate high-quality, short-term reversal opportunities while filtering out low-conviction setups.

At its core, our strategy triggers off Fair Value Gaps (FVGs) that occur a considerable distance away from a dynamically defined equilibrium band. It then validates these gaps by checking proximity to recent support and resistance drawn from swing extremes.

Additional confirmation comes from momentum filters and wick-rejection patterns, ensuring each entry aligns with both price structure and stretched momentum. Exits use volatility-adjusted profit targets. Keeping the approach disciplined and adaptive.

🧠Core Logic: Selectivity & Structure
This strategy is intentionally very selective. We have designed it to filter out roughly 95% of all market noise, highlighting only setups that pass multiple validation layers outlined below.

Fair Value Gaps (FVGs) as the Primary Trigger
FVGs identify imbalance zones where price historically retraces. These inefficient zones often become magnets for reversion as the market seeks to rebalance.

Dynamic Equilibrium Band + S/R
Defines a fair value zone with a long-term moving average and combines it with shorter-term swing pivots to establish support/resistance. Only FVGs that occur outside the band and near recent pivots are considered, ensuring reversals are sufficiently distanced and not taken too close to the mean.

Proximity to Support/Resistance
Setup validity depends on location. The strategy filters for FVGs near well-defined structural levels — areas where price has previously turned (i.e., recent swing highs or lows). This increases the likelihood that reversals are occurring at legitimate zones of confluence.

Wick-Rejection Confirmation
Confirms potential exhaustion through characteristic candle wick patterns beyond the equilibrium region. This acts as another filter to improve signal accuracy.

Sequential Filtered Signals
Custom logic ensures that a new signal in any direction must improve upon the previous one, preventing repetitive or suboptimal entries.

Multi-Step Confirmation
All validation layers must coincide on the same bar before a signal triggers, dramatically reducing false positives.

📈Chart Visuals: Designed for Clarity
To ensure transparency and easy interpretation, the script overlays intuitive visuals:

• Green “▲” below a candle: Indicates a potential long entry
  
• Red “▼” above a candle: Indicates a potential short entry
  
• Green “✔️”: Marks exit from a trade when ATR target is met
  
• Background shading (green/red): Indicates trade direction while active
  
• Support/Resistance lines: Auto-plotted from recent swing levels

🔔Alerts: Stay Notified Without Watching
The strategy supports real-time alerts on candle close, ensuring that signals are only triggered once fully confirmed.

You must manually set up alerts within your TradingView account. Once configured, you’ll be able to set up one alert per instrument. This one alert covers all relevant signals and exits — ideal for hands-free monitoring.

⚙️Strategy report properties

• Position size: 25% equity per trade
  
• Initial capital: 10,000.00 USDT
  
• Pyramiding: 10 entries per direction
  
• Slippage: 2 ticks
  
• Commission: 0.055% per side
  
• Backtest timeframe: 1-minute
  
• Backtest instrument: HYPEUSDT
  
• Backtesting range: Jul 21, 2025 — Aug 7, 2025

Note on Sample Size:
You’ll notice the report displays fewer than the ideal 100 trades in the strategy report above. This is intentional. The goal of the script is to isolate high-quality, short-term reversal opportunities while filtering out low-conviction setups. This means that the Barking Rat Reversions strategy is ultra-selective, filtering out over 95% of market noise by enforcing multiple validation layers. The brief timeframe shown in the strategy report here illustrates its filtering logic over a short window — not its full capabilities. As a result, even on lower timeframes like the 1-minute chart, signals are deliberately sparse — each one must pass all criteria before triggering.

We conducted a broader backtest covering the period from December 5, 2024 to July 31, 2025, during which the strategy identified 968 high-probability setups on the same instrument and timeframe as the strategy report.

For a larger dataset:
Once the strategy is applied to your chart, users are encouraged to expand the lookback range or apply the strategy to other volatile pairs to view a full sample.

💡Why 25% Equity Per Trade?
While it's always best to size positions based on personal risk tolerance, we defaulted to 25% equity per trade in the backtesting data — and here’s why:

• Backtests using this sizing show manageable drawdowns even under volatile periods
  
• The strategy generates a sizeable number of trades, reducing reliance on a single outcome
  
• Combined with conservative filters, the 25% setting offers a balance between aggression and control
  
• Users are strongly encouraged to customize this to suit their risk profile.

🔍What Makes This Strategy Unique?

1. Multi-factor confirmation using FVGs, EMA deviation, RSI, wick rejection, and S/R
   
2. Clean, Intuitive Chart Experience
   
3. Real-time alerts triggered only on confirmation
   
4. Variables monitor prior reversal points, guaranteeing each new signal offers an improved entry
   
5. Tracks active positions and resets filters upon exit.