Capitulation Detector Strategy by MagnetickAI
By MagnetickAI
Performance Metrics
- Author: MagnetickAI
- Symbol: NASDAQ:TSLA
- Timeframe: 5 minutes
- Net P&L: −11,596.04 USD (−11.59%)
- Win Rate: 34.5%
- Profit Factor: 0.388
- Max Drawdown: 11,655.32 USD (11.66%)
- Total Trades: 464
Description
A multi-factor capitulation detector designed to identify exhaustion points in extended trends. It focuses on fading capitulation moves after multi-leg trends with extreme volume and price extension.━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━THE CONCEPTCapitulation occurs when the last holders give up — panic selling into lows or euphoric buying into highs. These moments create asymmetric opportunities because:Sentiment becomes maximally skewedWeak hands are flushed outPrice deviates far from equilibriumThe "fuel" for continuation is exhausted━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━THE 6 FACTORSTrend Persistence — Price stays on one side of 38 EMA for 12+ bars, confirming a sustained directional moveAcceleration — Price stays on one side of 5 EMA for 3+ bars, showing the move is accelerating into exhaustionVolume Spike — Current bar volume ≥ 2x the 20-bar average Body Expansion — Candle body ≥ 1.5x average, showing conviction/panic in the moveExtension — Price is 2+ ATR away from the 38 EMA, indicating overextension from equilibriumMulti-Leg Structure — At least 3 consecutive lower lows (for longs) or higher highs (for shorts)━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━SIGNAL LOGICBullish Capitulation: 4+ factors align + price below 38 EMA + down candle + volume spikeBearish Capitulation: 4+ factors align + price above 38 EMA + up candle + volume spikeThe strategy enters counter-trend, fading the exhaustion move.━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━EXIT OPTIONSATR-based stop loss (default: 2 ATR)ATR-based take profit (default: 3 ATR)Optional trailing stopTime filter for session-specific trading━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━BEST PRACTICESWorks best on liquid instruments with clean trendsMore reliable after 3+ legs in the trendHigher conviction when daily AND intraday timeframes align"The bigger and more extended, the better"Consider VWAP as additional confirmation (not coded here)━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━SETTINGS GUIDEMin Score: Increase for fewer, higher-quality signalsVolume Spike Multiplier: 2x; increase for stricter filterExtension ATR: Higher values = more overextended setups onlyTrend Bars Min: Higher values = longer established trends required━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ALERTSBullish Capitulation (potential long)Bearish Capitulation (potential short)━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━DISCLAIMERThis is a counter-trend strategy — inherently higher risk than trend-following. Always use proper position sizing and risk management. Backtest thoroughly on your specific instruments and timeframes.