Forex atr strategy

Advanced system #16 (30 min ATR breakout)

Submitted by Edward Revy on October 25, 2010 - 15:09.

Time frame: 30 min.

Currency pair: any.

EMA 14 set on ATR 14.

i-FractalsEx: period 3, max bars (500 or any other number - it doesn't matter here).

Steps to set EMA14 over ATR 14 properly:

a. put ATR on the charts as usual.

b. from the Navigator window (on your left) drag Moving Average on ATR and in the settings make sure to put:

- MA method: Exponential.

- Apply to: Previous Indicator's Data.

To take a trade when the market prepares to accelerate.

This happens in a distinctive cycle where slow conditions by the end of the day (end of the New York session, through the Asian session) are changed by a fresh morning session (right after 00:00 EST).

ATR will help us to anticipate and prepare for that exact moment where the market is about to accelerate, while we'll focus on preparing a breakout range to catch the move.

When ATR is reading above 14 EMA - the market is active - that's where we want to be trading.

When ATR is resting below 14 EMA - there isn't much activity going on - that's where we don't need trade.

Use Fractals to set a breakout range.

Set a pending order above and below the range when ATR approached the 14 EMA from below and is about to cross (approximate timing here).

Preparing for the first trade:

- Find the last occurrence where ATR went below 14 EMA.

- use colored fractals from iForexEx indicator to create a breakout range. Use only those colored fractals that fall withing the period where ATR is below 14 EMA.

- if there are several same color fractals found, use the most distant ones - those that will create a wider range.

- when ATR approaches the 14 EMA from below and is about to cross (it's always an approximate timing, rather an anticipation, but you'll learn to identify it quickly after a few days), set pending orders above and below the range. One of them will be triggered on the breakout.

- SL - the opposite side of the range.

- min TP target = the width of the range, after that you can:

a. keep a position as long as ATR is rising and its above 14 EMA.

b. close when ATR goes below 14 EMA.

c. if you took partial TP or have a second order in place, you can keep them running for the rest of the day, even when ATR goes below 14 EMA until ATR falls to 0.0014, after that initiate a trailing stop and let it close with a stop.

That's the strategy. Hope you like it.

Great method and idea.

I have a question though. how do I save your article for future reference?

I tried right click but unable to select and save.

Good Method Edward i must say, will start testing it from tomorrow.

Can i trade it anytime, when ATR goes below EMA during whole trading day?

Here are rules what i observed:

1: Mark the range when ATR cross below and is below EMA, and mark the high and low of range.

2: When ATR is near to break above EMA set pending orders at High/Low of range.

3: SL other side of box.

4: TP 1st size of range. 2nd when ATR cross back below EMA. 3rd When ATR goes below 0.0014 set trailing stop.

Where can i find iFractals indicator. can i use simple fractals?

Please make Template.

I tried to put 14EMA on ATR 14 window but my platform is not allowing me to paste both indicators combined. How can i fix it?

sorry, forgot to add the indicator: i-FractalsEx. ex4.

copying of the content is not encouraged, sorry about that. It's a necessary measure to prevent copyright violation. Unfortunately, because of known copyright abuse (which is a common issue for many online resources), the good traders also have to adjust to new conditions.

Ideally, it should be the beginning of the trading day - before 4-6am EST. Any new entry signal that comes after 12 noon should be ignored.

I support your rules. There is plenty of opportunities to take advantage of using ATR+EMA.

You can definitely use regular fractals. What the i-Fractals does, it excludes/deletes certain fractals according to the period set, so that you see fewer fractals on the chart.

if you use MT4, you'll succeed by following the steps given above: "Steps to set EMA14 over ATR 14 properly"

If, however, you have another platform, then it depends on its functionality. It's better to ask your broker if such feature is available.

I have some more questions :)

1. Sometimes ATR just touch the EMA and turns back below so how to ignore this move, candle can easily hit our pending order.

2. Can we take entry when candle close outside of box as a conservative approach?

3. What if we dont get high or low ifractal arrow for range box?

Where can i discuss my chart setups with u.

Active traders Poll - share your live experience or read what others have to say.

ATR Strategy – How to Use the ATR in Forex Trading.

This is the second article in our ATR series. If you haven’t already we suggest that your check out the first article about the ATR Indicator. In that article, we covered the background of the “Average True Range”, or “ATR”, indicator, how it is calculated, and how it looks on a chart. Traders rarely use the indicator to discern future price movement directions, but use it to gain a perception of what recent historical volatility is in order to prepare an execution plan for trading.

The ATR is classified as an “oscillator” since the resulting curve fluctuates between values calculated based on the level of price volatility over a selected period. It is not a leading indicator in that it divulges nothing related to price direction. High values suggest that stops be wider, as well as entry points to prevent having the market move quickly against you. With a percentage of the ATR reading, the trader can effectively act with orders involving proportionate sizing levels customized for the currency at hand.

How to Read a ATR Chart.

The ATR with a period setting of “14” is presented on the bottom portion of the above “15 Minute” chart for the “GBP/USD” currency pair. In the example above, the “Red” line is the ATR. The ATR values in this example vary between 5 and 29 “pips”.

The key points of reference are highpoints, lowpoints, or extended periods of low values. The “ATR Rollercoaster” tends to work better for longer timeframes, i. e., daily, but shorter periods can be accommodated as shown here. The ATR attempts to convey pricing volatility, not pricing direction. It is traditionally used in tandem with another trend or momentum indicator to set stops and optimal entry point margins.

As with any technical indicator, an ATR chart will never be 100% correct. False signals can occur due to the lagging quality of moving averages, but the positive signals are consistent enough to give a forex trader an “edge”. Skill in interpreting and understanding ATR signals must be developed over time, and complementing the ATR tool with another indicator is always recommended for further confirmation of potential trend changes.

In the next article on the ATR indicator, we will put all of this information together to illustrate a simple trading system using this ATR oscillator.

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.

Daily Forex Strategy With Average True Range (ATR)

Here’s a profitable trend following strategy based on the 21 period Average True Range and the Supertrend indicator. It’s designed to trade off the daily time frame. Please feel free to experiment with other time frame’s as well. You’ll need to adjust ATR values for the lower time frame’s.

Indicators: SuperTrend, Average True Range (ATR 21)

Preferred time frame(s): Daily chart.

Trading sessions: End of day.

Preferred Currency pairs: Any.

The chart shown above illustrates the easy trading setup. Low ATR values + green supertrend = Open a buy trade. Low ATR values + red supertrend = Open sell trade. Low ATR values mean low volatility thus reduces your trading risk.

Average True Range has to be below 0.0100 (low volatility) Supertrend flips from red to green color (bullish trend)

Go long. Set stop-loss at 0.75% of the current ATR value. For example at 75 pips if ATR value shows 0.0100.

Price objective methods: (1) Use risk-to reward 1:2 (i. e. risking 75 to make 150). (2) Trail you stop up below the rising Supertrend line.

Average True Range has to be below 0.0100 (low volatility) Supertrend flips from green to red color (bearish trend)

Go short (sell) now. Set stop-loss at 0.75% of the current ATR value. For example at 75 pips if ATR value shows 0.0100.

Price objective methods: (1) Use risk-to reward 1:2 (i. e. risking 50 to make 100). (2) Ride the trend! Trail you stop down above the falling Supertrend line.

Related Posts.

Angle Bands Forex Trading Strategy.

Instantaneous Trend Forex Trading Strategy.

Average Directional Movement Index Rating (ADXR) Forex Strategy.

Advance Decline Line (ADL) Forex Strategy.

Leave a Reply:

Top Forex Trading Software.

Like Us On Facebook.

Download now all our forex systems, EA's, trading strategies and indicators 100% FREE for a limited time.

Copyright 2017 Dolphintrader.

Download The M1/M5 Forex Scalping Strategy Today!

This Incredible High Win Forex Scalping Strategy Will Trigger Only When There Is An Extremely High Chance Of A New Profitable Low Risk Trade To Take Place.

Up To 100 Pips Every Day Works on all forex pairs and Bitcoin! Low Risk Forex Scalping Works on M1, M5 and UP.

How to Use ATR in a Forex Strategy.

by Walker England.

Forex traders can use ATR to gauge market volatility. Traders should use larger stops and profit targets as ATR increases. Reading ATR can be made easier through the use of the ATR in pips indicator.

ATR (Average True Range) is an easy to read technical indicator designed to read market volatility. When a Forex trader knows how to read ATR, they can use current volatility to gauge the placement of stop and limit orders on existing positions. Today we will take a look at ATR and how to apply it to our trading.

Learn Forex –EURJPY Trend with ATR.

(Created using FXCM’s Marketscope 2.0 charts)

ATR is considered a volatility indicator as it measure the distance between a series of previous highs and lows, for a specific number or periods. ATR is displayed with a decimal to indicate the number of pips between the period highs and lows. This is important to a trader, as volatility increases so will a charts ATR value. As volatility declines, and the difference between the selected periods highs and lows decrease, so will ATR.

Traders can use ATR to actively manage their position in accordance to volatility. The greater the ATR reading is on a specific pair the wider the stop that should be used. This makes sense as a tight stop on a particularly volatile currency pair is more prone to be executed. As well a wide stop on a less volatile pair may make stops unnecessarily large. This can also hold true with limit orders. If ATR is a higher value, traders may seek more pips on a specific trade. Conversely, if ATR is indicating volatility is low, traders may temper their trading expectations with smaller limit orders.

Learn Forex –ATR in Pips Indicator.

(Created using FXCM’s Marketscope 2.0 charts)

---Written by Walker England, Trading Instructor.

To Receive Walkers’ analysis directly via , please SIGN UP HERE.

Interested in learning more about Forex trading and strategy development? Signup for a series of free “Advanced Trading” guides, to help you get up to speed on a variety of trading topics.

Register here to continue your Forex learning now!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

Upcoming Events.

Forex Economic Calendar.

Past performance is no indication of future results.

DailyFX is the news and education website of IG Group.