Use ATR Indicator to double your profit
Yes, I like atr also.
Anyone have an "atr slope for ea" or the like?
So you want to set a profit level but aren't sure on how to do it? I would suggest the use of the ATR indicator. For those who don't know, the ATR is a tool which measures the average range (high and lows of the the candles wicks) over a particular time period. The default you'll find in most trading programmes is a 14 bar period ATR.
For example, over the past 14 periods (bars), the EUR/USD has moved on average a range of this many pips for the following time periods:
M1 - 2.8 pips (in the last 14 minutes, price has moved an average of 2.8 pips per bar from bar low to bar high).
M5 - 5.8 pips
M15 - 9.5 pips
M30 - 13.3 pips
H1 - 38 pips
H4 - 70 pips
D1 - 178 pips
W1 - 383 pips
MN - 735 pips
If you're a day trader and you know that the average range price moves in a day is 178 pips, and price has already moved 170 pips, it's probably a good idea for you to close the trade, as squeezing out more may be unrealistic based on past performance (based on normal market conditions). The more pips you try to squeeze out of a trade at this point, the lower the probability of it being a success.
See the chart below for a visual idea of the ATR.
Try to keep in mind the ATR when making take profit decisions as if you make a take profit of 400 pips, and price moves in your direction, you can expect it to take at least 3 days at an ATR of 178 pips, so you know that you have to wait at least this amount of time at a minimum before your take profit level is hit.
I tend to set my take profits about 10-15 pips or so below a major resistance level, trend line or large round number. You always have to take into account the spread. If the spread is 3 pips and your take profit level is 1.5990, price will have to reach 1.5993 before your take profit level will be executed. Always remember, you buy from the ask and sell to the bid.
On top of the spread, price doesn't always reach the exact resistance point, so give a little room for price not reaching there. The Forex market isn't as mechanical as some people think, as it's all based on real people, money flow and supply and demand. If the demand isn't there to push price to 1.6000, it may only reach 1.5996: Therefore, if you had your take profit at 1.6000 your order wouldn't be filled.
Again, don't try to squeeze every single pip out of the market. You don't want price to miss your T/P by 5 pips, only to have it turn back and lose all of your profits. It happens; and if it hasn't happened to you, it will! I've found that over all, I've made more by not trying to squeeze every pip out of the market and having my trades hit their take profit and not have them turn around and head back on me.
very informative, thank you very much !
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So you want to set a profit level but aren't sure on how to do it? I would suggest the use of the ATR indicator. For those who don't know, the ATR is a tool which measures the average range (high and lows of the the candles wicks) over a particular time period. The default you'll find in most trading programmes is a 14 bar period ATR.
For example, over the past 14 periods (bars), the EUR/USD has moved on average a range of this many pips for the following time periods:
M1 - 2.8 pips (in the last 14 minutes, price has moved an average of 2.8 pips per bar from bar low to bar high).
M5 - 5.8 pips
M15 - 9.5 pips
M30 - 13.3 pips
H1 - 38 pips
H4 - 70 pips
D1 - 178 pips
W1 - 383 pips
MN - 735 pips
If you're a day trader and you know that the average range price moves in a day is 178 pips, and price has already moved 170 pips, it's probably a good idea for you to close the trade, as squeezing out more may be unrealistic based on past performance (based on normal market conditions). The more pips you try to squeeze out of a trade at this point, the lower the probability of it being a success.
See the chart below for a visual idea of the ATR.
Try to keep in mind the ATR when making take profit decisions as if you make a take profit of 400 pips, and price moves in your direction, you can expect it to take at least 3 days at an ATR of 178 pips, so you know that you have to wait at least this amount of time at a minimum before your take profit level is hit.
I tend to set my take profits about 10-15 pips or so below a major resistance level, trend line or large round number. You always have to take into account the spread. If the spread is 3 pips and your take profit level is 1.5990, price will have to reach 1.5993 before your take profit level will be executed. Always remember, you buy from the ask and sell to the bid.
On top of the spread, price doesn't always reach the exact resistance point, so give a little room for price not reaching there. The Forex market isn't as mechanical as some people think, as it's all based on real people, money flow and supply and demand. If the demand isn't there to push price to 1.6000, it may only reach 1.5996: Therefore, if you had your take profit at 1.6000 your order wouldn't be filled.
Again, don't try to squeeze every single pip out of the market. You don't want price to miss your T/P by 5 pips, only to have it turn back and lose all of your profits. It happens; and if it hasn't happened to you, it will! I've found that over all, I've made more by not trying to squeeze every pip out of the market and having my trades hit their take profit and not have them turn around and head back on me.