Hammer Trading System

Hammer Trading System for MetaTrader 5

Hammer Trading System is a price action indicator for MT5 designed to detect bullish Hammer and bearish Hanging Man reversal patterns and display structured trading levels on the chart.

Overview

Hammer Trading System detects single-candle reversal structures where price trades lower during the bar but closes near the high after rejecting the session low (Hammer) or trades higher but closes near the low after rejecting the session high (Hanging Man).

These patterns can be used to identify possible reversal conditions at trend turning points when confirmed by follow-through price action.

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 candle through several structural conditions.

These conditions can include:

• Long shadow on the rejection side relative to total range

• Shadow restriction on the opposite side

• Body positioned near the upper/lower part of the candle range

• Minimum body size relative to ATR

• Range size limits relative to ATR

• Trend context before the pattern

The indicator can detect both bullish Hammer and bearish Hanging Man patterns, depending on candle structure and recent price behavior.

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:

• Rejection shadow ratio

• Body position within the range

• Opposite shadow ratio

• Body relative to ATR

• Close position within the previous candle range

• Relative range compared to the prior candle

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

Multiple detection modes are available, including Standard Mode, Strict Mode, and Custom Mode.

Entry and trade planning

For confirmed setups, the indicator can project breakout levels using pending-style entry logic above/below the pattern extreme.

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 a pattern-based method, ATR-based logic, or Donchian Channel reference.

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:

• Quality Filter

• Extreme Zone Filter

• Direction Filter

• Stoploss Hunt Filter