Hammer Trading System

Hammer Trading System — Single-Candle Reversal at Trend Turning Points --MANUAL--

Introductory Pricing: This indicator is offered at introductory pricing that increases based on sales milestones. The current price is $49. After 10 sales, the price increases to $59. After 30 sales, it increases to $69. After 60 sales, the final price of $79 takes effect. All buyers receive the same full-featured indicator regardless of purchase price.

This indicator identifies Hammer and Hanging Man formations by analyzing lower shadow length, body position within the candle range, and trend context from the three bars preceding each candidate. A Hammer appearing after a downtrend generates a bullish Buy Stop signal; a Hanging Man appearing after an uptrend generates a bearish Sell Stop signal.

This indicator detects Hammer and Hanging Man formations on any symbol and timeframe, draws automated Entry/SL/TP trading levels, and tracks signal performance in real-time. Includes a multi-timeframe scanner monitoring up to 150 symbols across 8 timeframes simultaneously.

Included Tools

Each Hammer Trading System purchase includes access to the following companion tools at no additional cost:

1. Smart Trend Consensus MT5 — Multi-timeframe trend agreement indicator. Displays trend direction across up to 7 timeframes on a single dashboard. Helps confirm whether a Hammer is forming against or with the higher-timeframe trend before entry. https://www.mql5.com/en/market/product/160553

2. Price Volume Distribution MT5 — Volume profile and price distribution analysis. Identifies high-volume price zones where institutional orders cluster. Useful for confirming that Hammer patterns form near significant support or resistance price levels. https://www.mql5.com/en/market/product/160452

3. Hammer Trading System EA — Automated signal execution based on indicator output buffers. Reads Entry/SL/TP levels from the indicator and places pending orders automatically. Configurable lot sizing, risk per trade, and session filters. (Delivered via MQL5 private message after purchase confirmation.)

Contact the author through MQL5 messaging after purchase to receive access to the companion tools.

How Hammer Detection Works

The indicator evaluates each completed bar against six sequential structural gates:

1. Lower shadow extent: The lower shadow must occupy at least the minimum required fraction of the total candle range, confirming that sellers drove price well below the open before buyers recovered the close.
2. Body position: The midpoint of the candle body must sit at or above a minimum threshold within the range, confirming the body clusters near the top rather than the middle or bottom.
3. Upper shadow constraint: The upper shadow must remain below the maximum allowed fraction of range. Significant upper shadow would indicate buyer rejection from above, which conflicts with the pattern structure.
4. Range significance: The total candle range must equal or exceed a minimum multiple of ATR, rejecting formations that occur during tight, low-volatility consolidation periods.
5. Shadow-to-body ratio: The lower shadow must be at least twice the body height. This is the core Nison criterion for a valid Hammer and ensures the long shadow is the dominant feature rather than body size.
6. Doji exclusion: The body must be at least 0.02 times ATR. A near-zero body produces a Dragonfly Doji rather than a Hammer — the two are structurally related but analytically distinct and handled by separate detectors.

Trend context is determined from the three bars immediately before each candidate. If at least two of those bars are declining (lower closes), the pattern is a Hammer. If at least two are rising (higher closes), the pattern is a Hanging Man. Ambiguous context defaults to Hammer classification.

6-Factor Quality Scoring

Each pattern that passes all six gates receives a score from 0 to 1 based on six weighted factors:

• Lower shadow ratio: proportion of total range occupied by the lower shadow (weight: 0.35)
• Body position: how high the body midpoint sits within the candle range (weight: 0.25)
• Upper shadow inverted: penalty applied as upper shadow grows relative to range (weight: 0.15)
• Range to ATR: candle size relative to recent Average True Range (weight: 0.10)
• Close vs prior range inverted: close position within the previous candle's range, rewarding closes in the lower portion that confirm downtrend context (weight: 0.10)
• Relative range: this candle's range compared to the previous candle (weight: 0.05)

Two detection presets are available. Standard mode applies baseline thresholds (lower shadow >= 35%, body position >= 50%, upper shadow <= 15%, range >= 0.40xATR). Strict mode tightens all four gates (45%, 60%, 10%, 0.50xATR) and selects only the most clearly-formed examples. A Custom mode allows individual adjustment of each gate independently.

Pattern-Specific Settings

• Min Lower Shadow Ratio: minimum lower shadow as a fraction of total candle range (Standard: 0.35, Strict: 0.45)
• Min Body Position: minimum body midpoint position within the candle range (Standard: 0.50, Strict: 0.60)
• Max Upper Shadow Ratio: maximum allowed upper shadow as a fraction of total range (Standard: 0.15, Strict: 0.10)
• Min Range/ATR: minimum candle range as a multiple of ATR (Standard: 0.40, Strict: 0.50)
• Entry Buffer (xATR): additional offset applied to the entry level beyond the pattern high or low (default: 0.05)
• SL Buffer (xATR): offset applied to the stop loss level beyond the pattern low (Hammer) or high (Hanging Man) (default: 0.25)
• Detection Preset: Standard, Strict, or Custom
• Quality Score Minimum: filter signals below a defined score threshold

Automated Trading Levels

Every detected pattern automatically draws Entry, Stop Loss, and up to 4 Take Profit levels (TP1-TP4) directly on the chart. For Hammer patterns, a Buy Stop is placed above the pattern high plus an ATR buffer. For Hanging Man patterns, a Sell Stop is placed below the pattern low minus an ATR buffer. Stop Loss can be calculated using one of three methods: Donchian Channel (based on recent low for bullish or recent high for bearish), ATR multiplier (a fixed distance applied opposite to the signal direction), or Pattern (a buffer below the pattern low for Hammers or above the pattern high for Hanging Men). Take Profit levels are spaced using configurable risk-reward multiples applied to the SL distance.

Live Signal Tracking

The indicator tracks each signal from detection through completion. Signal states include: Pending (entry order not yet triggered), Active (trade entered, tracking in progress), TP Hit (one or more take profit levels reached), SL Hit (stop loss triggered), and Expired (signal invalidated without entry). All state transitions are logged and reflected in the signal statistics dashboard.

Donchian Channel Trailing Stop

An optional trailing stop system uses the Donchian Channel lower band for bullish signals as a dynamic stop level that adjusts with price as the trade progresses. As the channel lower band rises during an upward move, the trailing stop follows, preserving open profit without requiring a fixed exit target. For bearish signals, the upper band trails downward. This method can be combined with fixed TP levels or used independently.

Multi-Timeframe Scanner (150 Symbols x 8 Timeframes)

Monitor patterns across the entire market from a single chart. The scanner checks up to 150 symbols across 8 timeframes simultaneously and displays results in a sortable panel. Each row shows symbol, timeframe, signal direction, quality score, and current signal state. Symbols are loaded from MT5 Market Watch. Scanner updates asynchronously to avoid blocking chart calculations during refresh cycles.

Market Structure Analysis (BOS / CHOCH)

Built-in Break of Structure and Change of Character detection identifies key swing points and labels structural shifts on the chart. BOS marks a continuation of the prevailing direction when price breaks a prior swing high or low. CHOCH marks a potential reversal when price breaks structure against the prior trend. These labels provide context for evaluating whether a Hammer or Hanging Man signal aligns with current market structure or represents a counter-trend entry.

Multi-Layer Signal Filtering

Seven independent filters can be enabled or disabled individually to control which detected patterns are displayed:

1. Quality filter: only show patterns scoring at or above the defined minimum quality threshold
2. Extreme zone filter: block signals when price is positioned near overbought or oversold Donchian Channel extremes
3. Direction filter: only allow signals aligned with the detected higher-timeframe trend direction
4. Stoploss hunt filter: validate that signals originate from genuine sweeps of prior swing levels
5. Signal zone filter: require signals to form near confirmed market structure events (BOS, CHOCH, swing levels)
6. Spacing filter: enforce a minimum number of bars between consecutive signals
7. Opposite signal filter: prevent conflicting buy and sell signals from appearing simultaneously

4-Channel Alert System

Alerts are delivered through four independent channels that can be enabled separately: MT5 pop-up notification, MT5 push notification to mobile app, email alert, and sound alert with a selectable audio file. Alerts fire at pattern detection and optionally at entry trigger, TP hits, and SL hit.

Signal Statistics Dashboard

A draggable panel displaying real-time performance metrics for signals detected in the current session and historically. Metrics include total signals detected, entry trigger rate, TP1 through TP4 hit rates, SL hit rate, average quality score, and win rate. The dashboard updates automatically as signal states change.

Professional Chart Themes

Built-in color schemes allow switching the indicator's visual style to match different chart backgrounds. Available themes include Dark, Light, and Custom. Each theme adjusts the color palette for pattern markers, trading level lines, scanner panel, and dashboard text. Custom color overrides are available for all elements through the inputs panel.

EA Signal Buffers

Indicator outputs are available as data buffers for Expert Advisors. Buffer 0 outputs the signal direction (1 for bullish, -1 for bearish) at the bar where a pattern is detected. Buffer 1 outputs the quality score. Buffer 2 outputs the calculated Entry price. Buffer 3 outputs the Stop Loss price. Buffers 4 through 7 output TP1 through TP4 prices. An EA can read these buffers using iCustom() to build automated strategies without modifying the indicator source.

Recommendations

Timeframes: H1 and H4 provide a reliable balance between signal frequency and structural quality. Lower timeframes produce more signals with higher noise; higher timeframes produce fewer but more clearly defined formations with stronger reversal context.

Symbols: The indicator works on any symbol available in MT5 Market Watch. Hammer and Hanging Man formations are commonly observed on Forex major and minor pairs, XAUUSD, stock indices, and commodity instruments, particularly at identifiable support and resistance levels following a directional move.

Installation:

1. Copy the indicator file to the MQL5/Indicators directory in the MT5 data folder.
2. Restart MetaTrader 5 or refresh the Navigator panel.
3. Locate Hammer Trading System under Custom Indicators in the Navigator.
4. Drag the indicator onto a chart and configure inputs as needed.
5. For the scanner, attach the indicator to a single chart; it will monitor all configured symbols automatically.

Notes:

• No repainting: signals are confirmed only on bar close and do not change after detection.
• Bar-close processing only: the indicator evaluates each bar once at close, following per-bar processing standards.
• Scanner operates asynchronously and updates in the background without affecting chart rendering performance.
• Memory usage is optimized for long-running sessions; object pooling is used for all chart drawings.

Documentation and User Guides

Detailed guides for each feature are available on the MQL5 Blog:

PART	Section	Description
1	INTRODUCTION	Product introduction, what the product helps you with
2	INSTALLATION & SETUP	System requirements, step-by-step installation guide
	Guide to Installing Free Indicators and EAs Included with the Mirage Trading System Purchase
3	INTERFACE DISPLAY	Explanation of the components displayed on the chart
	User Guide: Trading Lines & Signal Tracking System	The system automatically draws Entry, Stop Loss, and Take Profit lines (TP 1–4) on the chart, tracks price action for hits, records Win/Loss results, and displays real-time performance statistics.
	User Guide : Visualization, Zone Fill, Signal Dashboard & Cancelled Signals	When you attach an indicator to a chart, the system renders the following visual components for each detected signal
	User Guide: MTF SCAN & Dashboard User Guide	MTF SCAN automatically scans all Market Watch symbols across 8 timeframes (M1 to W1) and displays results on a Dashboard grid directly on your chart.
	User Guide : Chart Theme User Guide	Chart Theme is a feature that changes the entire chart color scheme in MetaTrader 5 — including the background, candles, grid, text, and Bid/Ask lines — with a single click.
4	CORE CONCEPTS	Fundamental concepts that the system is built upon
	User Guide: Market Structure Functionality in the Trading System	Identifies trend direction (Uptrend, Downtrend, Ranging) by analyzing swing highs/lows, and detects key events: BOS (trend continuation) and CHoCH (potential trend reversal).
	User Guide : Signal Types, States, and Lifecycle	A signal is the system's notification when it detects a qualifying candlestick pattern on the chart. Each signal tells you the expected price direction and provides suggested entry, stop loss, and take profit levels.
5	SIGNAL FILTERS	Filters that refine and validate trading signals
	User Guide: Trade Direction (Direction Filter) in the Trading System	Defines the allowed trading direction (Buy only, Sell only, both, or neither) as the first filter before searching for entry signals, based on current market trend.
	User Guide: Signal Zone Filter in the Trading System	Eliminates signals not near important price zones, retaining only those connected to market structures (swing high/low, BOS, CHoCH) to reduce noise.
	User Guide: StoplossHunt Filter User Guide — Filtering "SL Sweep" Signals	Identifies higher-probability signals by checking whether price "swept stoploss" before forming a pattern.
	User Guide : Extreme Zone Filter	Extreme Zone Filter is a signal filtering feature that helps avoid entering trades when price is at the top or bottom of a Donchian price channel.
	User Guide: Opposite Signal Filter	The Opposite Signal Filter is an automatic feature that prevents new signals from appearing when you already have an active trade running in the opposite direction.The principle is very simple: Don't buy when you're selling. Don't sell when you're buying.
	User Guide : Quality Filter User Guide	Quality Filter is a feature that helps you receive only the best signals — price patterns formed clearly, with balanced proportions and high reliability — and reject weak signals, dull patterns, and those below standard.
6	TRADE MANAGEMENT
	User Guide : Risk/Reward & SL Method User Guide	Risk/Reward (R:R) is the ratio between the amount of money you accept losing (Risk) and the amount of money you expect to gain (Reward) in a single trade.
	User Guide: Trailing Stop Loss (TSL) User Guide	Regular Stop Loss (SL) stays fixed in one place. You set SL at 1990.00, and it stays there forever — even if price has risen to 2030.00.Trailing Stop Loss (TSL) is different. It automatically moves in your favor when price advances. As price moves up, TSL moves up with it. When price stalls or reverses, TSL holds the best position it reached.
7	CONFIGURATION PARAMETERS GUIDE	Detailed guide to each configuration parameter
	SIGNAL SCANNING CONFIGURATION GUIDE - MIRAGE TRADING SYSTEM EA	Guide to mastering signal scanning settings within the Inputs tab, optimizing trade discovery on a single chart or across the entire market.
8	ALERTS & NOTIFICATIONS
	User Guide: Alerts & Notifications User Guide	Configure push notifications, and on-screen popups when new signals are detected.
9	SYSTEM RISKS & LIMITATIONS	Notes on system risks and limitations

Support

• Product comments section on this page
• Direct message to the author via MQL5: https://www.mql5.com/en/users/khiemni/seller
• Response time: within 24 hours