The STRAT explained
The STRAT by Rob Smith is a price-action methodology that classifies each candle relative to the previous candle and then studies sequences across multiple timeframes. This overview is descriptive and educational.
Candle classification
Each candle is classified into one of three types based on how it relates to the prior candle.
- 1 = Inside bar (range contained within the prior candle).
- 2 = Directional bar (breaks one side of the prior candle).
- 3 = Outside bar (breaks both sides of the prior candle).
STRAT candle types are defined by the full range from low to high. The open and close do not determine whether a candle is a 1, 2, or 3.
What 2U and 2D mean
A 2U candle breaks the prior high without breaking the prior low. A 2D candle breaks the prior low without breaking the prior high. These are directional states used to describe structure, not recommendations to act.
How sequences are labeled
Multi-candle sequences are labeled by their candle types in order. For example, 2-1-2 is a directional bar followed by an inside bar and then another directional bar. 3-2-2 begins with an outside bar and then two directional bars. Sequence labels describe structure and are best interpreted in context.
Continuation vs. reversal
STRAT sequences are often categorized as continuation or reversal based on how direction evolves across the sequence and the higher-timeframe backdrop. These categories are analytical labels used to describe structure rather than instructions to act.
FTFC (Full Timeframe Continuity)
FTFC measures higher-timeframe alignment by comparing the close versus open on the latest higher-timeframe candles. When multiple higher timeframes align, FTFC provides a higher-level context filter for interpreting sequences.