Three Outside Trading System

Three Outside Trading System for MetaTrader 5

Three Outside Trading System is a price action indicator for MT5 designed to detect 3-bar engulfing reversal patterns with confirmation in the third candle.

Overview

Three Outside Trading System detects three-candle reversal structures in which a small setup candle is followed by a larger engulfing candle and then a confirmation candle that continues the new direction.

This pattern can be used to identify exhaustion in the prior move followed by a stronger and more sustained reversal.

All calculations are based on completed bars only.

Detection is non-repainting. Signal values do not change after the bar is closed.

The indicator can draw Entry, Stop Loss, and Take Profit levels directly on the chart and track signal progress after detection.

Detection Logic

The detection model evaluates each completed three-bar pattern through several structural conditions.

These conditions can include:

Setup candle with minimum body ratio

Engulfing candle whose body fully contains the setup body

Minimum engulfing body strength relative to range and ATR

Confirmation candle that closes beyond the engulfing candle close

Entry buffer and stop loss buffer based on ATR

The indicator can detect both Three Outside Up and Three Outside Down structures.

Patterns that do not meet the selected structural requirements are ignored.

Quality Evaluation

Each valid pattern can be evaluated through a multi-factor quality model.

The scoring process can include measurements such as:

Engulf ratio

Engulfing body strength relative to ATR

Confirmation strength

Continuation depth

Signals below the selected minimum threshold can be filtered out automatically.

Entry and trade planning

For confirmed setups, the indicator can project breakout levels above the pattern high for buy setups or below the pattern low for sell setups.

For each valid setup, the indicator can display:

Entry level

Stop Loss level

Up to four Take Profit levels

Risk and reward zones on the chart

Stop Loss can be calculated using pattern-based placement, Donchian Channel logic, or ATR-based logic.

An optional trailing stop based on Donchian logic is also available for users who want dynamic trade management after entry.

Filters and tools

Optional filters are available to reduce unnecessary signals.

These include Quality Filter, Extreme Zone Filter, Direction Filter, Stop Hunt Filter, Signal Zone Filter, Spacing Filter, and Opposite Signal Filter.

The built-in scanner can monitor up to 150 symbols across 8 timeframes from a single chart.

The indicator also includes BOS and CHOCH labels, a signal dashboard, alert options, chart themes, and output buffers for Expert Advisor integration.

Recommended use

Recommended timeframes are H4 and D1 because Three Outside patterns tend to be more reliable when reversal structure is clearer.

The indicator can be applied to Forex pairs, XAUUSD, indices, and crypto symbols, depending on broker data quality and symbol characteristics.

Loading sufficient chart history is recommended for more stable structure analysis.

MetaTrader 5 only.

No DLL calls.

No external WebRequest connections.

Important notes

This indicator is a technical analysis tool.

It does not guarantee trading results.

Users should test settings in their own environment and apply appropriate risk management.

Support is available through the product comments section or via MQL5 direct message.