MODEL ADOPTION #1304: ADOPT — TG AUTO: New edge proposed: dow_theory_secondary_test — E8 Intelligence Research

Abstract

DECISION: ADOPT ELEMENT: Add as a pre-entry filter: "Enter only if the current bar is a secondary test of a prior primary swing extreme (≥5% daily swing, ≥38.2% retrace, close within 0.5 ATR of extreme, volume < avg of prior 5 bars)." EXPECTED IMPACT: Win rate +8–12% (from ~41% to ~50–53%) by eliminating premature counter-trend entries; profit per trade +0.2–0.5% due to fewer false reversals. RISK: Delayed entry may miss the first 1–3 bars of a fast reversal (15s–1m scalps); volume average may be noisy on low-liquidity pairs; 0.5 ATR proximity may be too loose for very tight swings. TEST: Run on EURUSD and GBPUSD 5m data for last 90 days: compare GTX entries with vs. without the filter. Must show ≥5% win-rate improvement and ≤10% reduction in total trade count. Also test 0.3 ATR variant for 1m scalps. Author: Andrew Stewart Caldin, Independent Researcher, UK. Part of the E8 Intelligence Research series. Platform: e8intelligence.com