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Actionable Signals: Trigger, Magnitude & the Reversal Playbook

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Definition Actionable signals cause price to move. Every signal has a trigger level. Most signals also have a magnitude (the target).
The actionable signal family: 2-2, 2-1-2, 3-1-2, 1-2-2, 1-3, 1-3-2, 3-2-2, hammer and shooter, each forming live with its trigger and magnitude and named when it triggersThe signal family: each one has a trigger and a magnitudetrigger (red on a bearish signal)magnitude: the targetX = the bar before the pattern. Bullish versions shown; the shooter is bearish. Every bearish version is the mirror image.2-2 reversalX2d12u2d-2u ✓2-1-2 reversalX2d112u2d-1-2u ✓3-1-2X3112u3-1-2u ✓1-2-2 rev stratX12d12u1-2d-2u rev strat ✓1-bar rev strat (1-3)X112d3reclaim: 1-3 rev strat ✓1-3-2 rev stratX1312u1-3-2u rev strat ✓3-2-2 reversalX32d12u3-2d-2u ✓HammerX2d12uhammer: 2d-2u ✓ShooterX2u12dshooter: 2u-2d ✓The setup bars print. Each bar closes before the next opens.The trigger and the magnitude are known before the last bar opens.The last bar forms live. A signal goes in force when price takes its trigger.All nine in force. Each one now aims at its magnitude.TheStrat.AI
Schematic. Each signal is named when the last bar takes its trigger.

Rob (Quant Edge): “… they show us important equilibriums that must at least attempt to break, as well as showing us when we can identify people caught on the wrong side of price movement.”

Trigger and magnitude

DIA weekly 1-2d-2u rev strat, January 2017: an inside week, a 2d week, then a 2u week that takes the 2d week’s high at 198.65 on Tuesday and the motherbar’s high at 199.83 on Wednesday197198199200201202WEEK12/262u1/912d1/2312u197198199200201202DAYJan18192d202u2312d2412u252u262u27119719819920020120260-MIN2u2uMon 2312u32d12d112u112uTue 2412d312u12u12u12u12u312dWed 252u12u12d12u12u12d12uThu 262u1112d12u12u12dFri 2712u312d12u12d112u312u1-2d: setup1-2d-2u rev strathammer 2d-2u2d-1: inside 602d-1-2uInside week, then a 2d that Rob calls a hammer. Trigger: its high, 198.65.Monday off the low: the 60 goes inside (2d-1).The 60 goes 2d-1-2u: a buy in conflict, day and week still red.Monday closes as a 2d hammer day. Its high: 198.11.Tuesday takes 198.11: daily hammer 2d-2u.Tuesday takes 198.65: the week goes 2u. Rev strat in force.Wednesday gaps over 199.57 and 199.83: magnitude hit.The week closes at 200.63, above all three levels.DIA · week of Jan 23, 2017 · real dataopen of the bar in progressmagnitude: the motherbar’s high 199.83inside week’s high 199.57trigger: the 2d bar’s high 198.65TheStrat.AI
DIA, Jan 23–27 2017, real data (Alpaca SIP), built from the 30-minute stream. Rob’s Quant Edge example. The 60 and the day reverse first; then the week takes its trigger.

A signal goes in force when price takes its trigger. The magnitude is the far side of the range it reverses into. Rob: “Any actionable signal reverses back to the previous range.”

Inside week, then a 2d that Rob calls a hammer. Rob’s DIA call: “The RevStrat on the diamonds goes in force above $198.65.”

Rob, on a bullish rev strat: the stops of the trapped shorts are at “… the top of the hammer, the top of the inside bar, the top of the mother bar. When the rev-strat works properly, those two trigger the third.”

A signal stays in force only while its triggering bar is open: a weekly signal has the rest of the week.

The signals

Inside bar: the 1, an equilibrium that must attempt to break. The 2-1-2 and the measured move start here.

2-2 reversal: a 2 reversed straight back by the next 2. Also the 3-2-2 and the momentum 2u-2d-2u / 2d-2u-2d stacks.

3-1-2: outside bar, inside bar, then the break of the 1.

Rev strats: Rob: “Any actionable signal after an inside bar is a rev-strat.” 1-2-2: two bars. 1-bar rev strat (1-3): breaks one side of the 1, then reclaims it in the same bar, often on gaps. 1-3-2: a 1-3 that closes as a hammer or shooter.

Hammer and shooter: a large wick. The hammer’s body closes in the top 33% of its range; the shooter opens and closes in the bottom 33%. Potentially trapped shorts or longs.

Momentum or retracement

Momentum or retracement: an inside bar breaks up after a green bar (momentum) and after a red bar (retracement)Same break up, two kinds: read the bar before the signaltrigger: the inside bar’s highthe prior bar’s highPrior bar green: momentumX2u112umomentum: 2u-1-2u ✓Prior bar red: retracementX2d112uretracement: 2d-1-2u ✓Left: inside bar in the upper 50% of a green bar. Right: after a red bar.Green before: momentum into new highs. Red before: retracement.TheStrat.AI
Schematic. Green bar before the signal: momentum. Red bar before: retracement.

Rob: “If the bar previous to an actionable signal is green and the actionable signal is in the upper 50% of that bar, a break to the upside is considered to be momentum and is breaking into new recent highs.” After a red bar, the same break is a retracement. The downside is the mirror.

Reversals are higher probability than continuations. Once a continuation makes a new high or low, the answer is we don’t know. The kind changes the management, not the entry. See the trade checklist and stop losses.

Frequently asked

What is the difference between a trigger and a magnitude?

The trigger puts the signal in force. The magnitude is the target. Continuation signals can have no magnitude; use a measured move.

Whether to take a signal is a timeframe question: see full timeframe continuity.

Scan for these: Scan Recipes: recipe 1 finds these setups forming, recipe 2 finds them in force.
Related: Types of Reversals · The Compound 3 · Levels of Reclaim
Back to: The 3 Universal Truths That Govern Price →

TheStrat was developed by Rob Smith. These docs are written by Alex Sopa (AlexsOptions) and quote his teaching. Work in progress: spotted an error? Tell Alex.

For AI agents: free TheStrat tools (MCP and REST) at thestrat.ai/agents.