Three Outside Trading System

Three Outside Trading System — Engulfing Reversal Confirmation Pattern Detection

A small setup candle followed by a larger engulfing candle whose body fully contains the setup body, then a third candle that confirms the reversal by closing beyond the engulfing close — that is the Three Outside Up (bullish) and Three Outside Down (bearish) pattern. The engulfing candle creates a dramatic power shift showing new direction dominance, while the confirmation candle validates sustained momentum. This 3-bar formation signals exhaustion followed by decisive breakout, not random price noise.

Three Outside Trading System detects both Three Outside Up (bullish engulfing reversal) and Three Outside Down (bearish engulfing reversal) formations on any symbol and timeframe. Each detected pattern receives automated Entry, Stop Loss, and up to 4 Take Profit levels (TP1-TP4) drawn directly on the chart. A built-in multi-timeframe scanner monitors up to 150 symbols across 8 timeframes simultaneously.     MANUAL

Included Tools

Each Three Outside 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 Three Outside pattern trend alignment before placing entries. 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 support/resistance confluence near engulfing reversal breakout zones. https://www.mql5.com/en/market/product/160452

3. Three Outside 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 Three Outside Pattern Detection Works

The indicator scans for a 3-candle engulfing reversal structure on each completed bar:

1. Setup Bar Validation — A candle showing exhaustion with body ratio ≥ 25% (can be small, indicating weakness in prior trend)
2. Engulfing Bar Dominance — The second candle's body must fully engulf the setup body (body-only engulfing, wicks can extend), with body ratio ≥ 50% and range ≥ 0.5× ATR (strong directional conviction)
3. Confirmation Continuation — Third candle must have body ratio ≥ 35% and close beyond the engulfing candle's close (sustained momentum in new direction)

Three Outside Up (bullish): Setup bearish → Engulf bullish (body engulfs setup) → Confirm closes above engulf close. Three Outside Down (bearish): Setup bullish → Engulf bearish (body engulfs setup) → Confirm closes below engulf close.

Entry is placed above the pattern high (buy) or below the pattern low (sell) + ATR buffer. Stop Loss covers the entire 3-candle range or uses Donchian Channel.

4-Component Quality Scoring evaluates (equal-weight factors):

• Engulf Ratio: Engulfing body / setup body (ideal 1.20-3.00, larger = better)
• Engulf Body Strength: Engulfing body / ATR (ideal 0.50-1.50× ATR)
• Confirmation Strength: Confirmation body / ATR (ideal 0.35-1.20× ATR)
• Continuation Depth: (Confirm close beyond engulf close) / ATR (ideal 0.10-0.80× ATR)

Three Outside-Specific Settings:

• Setup candle: minimum body ratio (default 0.25)
• Engulfing candle: minimum body ratio (default 0.50), minimum range/ATR (default 0.50)
• Confirmation candle: minimum body ratio (default 0.35)
• Entry buffer (ATR multiple, default 0.05)
• SL buffer (ATR multiple, default 0.10)

Automated Trading Levels

Every detected pattern automatically draws Entry, Stop Loss, and up to 4 Take Profit levels (TP1-TP4) based on configurable Risk:Reward ratios. Price labels display pip distance and R:R ratio for each level.

Stop Loss methods:

• Donchian Channel (structure-based, adapts to volatility)
• ATR Multiplier (fixed distance based on Average True Range)

Default R:R targets: TP1=0.5R, TP2=1.0R, TP3=1.5R, TP4=2.0R (fully customizable, set to 0 to disable any level).

Live Signal Tracking

The indicator tracks each signal from detection through completion:

• Pending — waiting for entry price to be hit
• Active — entry hit, tracking toward TP or SL
• Finished — TP or SL reached

A dotted tracking path shows actual price movement after each signal. Profit/loss labels appear at hit points. Zone fill rectangles visualize risk and reward areas on the chart.

Donchian Channel Trailing Stop

An optional trailing stop system that automatically adjusts the stop loss as price moves favorably:

• Uses the Donchian Channel (lowest low / highest high over N bars)
• Activates after price reaches a configurable R:R threshold
• Locks at breakeven when TP1 is hit
• Visual color changes: orange (trailing buy), yellow (trailing sell), green (locked at breakeven)

Multi-Timeframe Scanner (150 Symbols x 8 Timeframes)

Monitor Three Outside Up and Three Outside Down patterns across the entire market from a single chart:

• Scans up to 150 symbols from your Market Watch
• Checks 8 timeframes: M1, M5, M15, M30, H1, H4, D1, W1
• Live dashboard panel shows detected signals with quality scores
• Configurable batch scanning to control CPU usage
• Independent alert system for scanner-detected signals

Two scanning modes:

• Current Symbol MTF: scans only the chart symbol across all timeframes
• Full Market Scan: scans all Market Watch symbols across selected timeframes

Market Structure Analysis (BOS / CHOCH)

Built-in Break of Structure and Change of Character detection:

• Identifies swing highs and lows using fractal analysis
• Labels swing sequences: HH (Higher High), HL (Higher Low), LH (Lower High), LL (Lower Low)
• Detects BOS (trend continuation) and CHOCH (trend reversal) events
• Configurable timeframe and sensitivity
• Visual lines and labels on chart

Multi-Layer Signal Filtering

Seven independent filters to reduce noise and increase signal quality:

1. Quality Filter — Minimum quality score threshold to pass
2. Extreme Zone Filter — Block signals near overbought/oversold zones using Donchian Channel position thresholds
3. Direction Filter — Only allow signals aligned with the current trend direction (auto-detects from market structure, or set manually)
4. Stop Hunt Filter — Validate that signals originate from genuine liquidity sweeps of prior swing levels
5. Signal Zone Filter — Require signals to form near meaningful market structure events (BOS, CHOCH, swing levels)
6. Spacing Filter — Enforce minimum bars between detected patterns
7. Opposite Signal Filter — Prevent conflicting buy/sell signals from appearing simultaneously

Each filter can be enabled/disabled independently.

4-Channel Alert System

Stay informed with multi-channel notifications:

• Desktop Popup Alert (MT5 Alert dialog)
• Sound Alert (customizable sound file)
• Mobile Push Notification (MT5 mobile app)
• Configurable separately for Entry hits, TP hits, and SL hits

Anti-spam: once-per-signal deduplication with configurable cooldown period.

Signal Statistics Dashboard

A draggable panel displaying real-time performance metrics:

• Total signals detected
• Win/Loss count and Win Rate percentage
• Active vs completed signal counts
• Customizable position, font size, and row height

Chart Themes

Built-in color schemes for comfortable chart reading:

• Dark Muted (default) — reduced eye strain
• Dark — high contrast
• Light — bright background
• Custom — full color control for every chart element

Original chart colors automatically restored when the indicator is removed.

EA Signal Buffers

Indicator outputs are available as data buffers for Expert Advisors:

• Buffer 0: Signal direction (1=Buy, -1=Sell)
• Buffer 1: Entry price
• Buffer 2: Stop Loss price
• Buffer 3-6: TP1-TP4 prices
• Buffer 7: Quality score

Connect your EA to read these buffers for automated trade execution.

Recommended Settings

• Timeframes: H4, D1 (Three Outside patterns are reliable on higher timeframes where engulfing reversals carry more weight, H4 offers highest signal frequency with 8-18 signals per month)
• Symbols: Works on all Forex pairs, Gold (XAUUSD), Indices, and Crypto pairs
• Account type: Any (demo or live)
• Minimum bars on chart: 500+ for reliable market structure analysis

Installation

1. Download and place in your Indicators folder
2. Drag onto any chart
3. Enable "Allow notifications" in MT5 if using push alerts
4. Adjust Quality Score threshold to control signal frequency (lower = more signals, higher = fewer but stronger signals)

Notes

• This indicator does NOT repaint — signals are confirmed on bar close only
• All calculations use completed bars (bar index 1+) for stability
• Scanner operates asynchronously to prevent chart lag
• Memory-optimized for 24/7 continuous operation

Documentation and User Guides

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

• I

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

All guides include parameter explanations, chart examples, and recommended settings for each feature.

Support

• Product comments section on this page
• Direct message to the author via MQL5
• Response time: within 24 hours