Entropy Strategy (H1 & H4)

A volatility‑state strategy for H1 & H4 using Entropy to separate compression from expansion. We trade the transition: from low‑entropy squeeze to high‑entropy breakout/drive.

Tools & settings

• Entropy indicator (normalized): identify low‑state bands vs rising bursts.
• Market structure (HH‑HL/LH‑LL) or EMA(50) slope for bias.
• ATR(14) for stops/sizing; news blackout around major releases.

Idea

Price alternates between order (compression) and disorder (expansion). When Entropy exits a low band and rises with price through a level, continuation probability increases.

Long setup (H1/H4)

1. Bias up; Entropy spends time sub‑threshold then hooks up.
2. Break‑and‑close above the micro‑level or range high with rising Entropy. Trigger: confirm close or retest‑that‑holds while Entropy stays elevated.

Short setup (H1/H4)

1. Bias down; Entropy compresses then hooks down.
2. Close below micro‑level/range low with rising Entropy. Trigger: confirm close or failed retest while Entropy remains elevated.

Risk & management

• Stop‑loss: beyond the setup structure or ATR(14) × 1.1–1.6.
• TP1: 1.0R–1.5R partial; TP2: trail by structure/time‑of‑day.
• Avoid trades when Entropy whipsaws around the threshold without trend alignment.