Excuse the half-formed ideas, just playing around with something and want some feedback.
Right from when I started trading forex, one of the things I learned was trends don't usually start from opposite trends, they start from periods of low volatility.
With this in mind, I looked at the ATR(14) on the 30mins and hour charts. Can I take a low ATR value as an indication that a new trend/breakout is looming?
Here's what I have in mind:
when the ATR dips below a certain level, place entry orders at the recent (10-14 bars back) high and low. When the price goes through one, the trade is taken. s/l is at the other entry level.
Exits (always the most difficult part) are a trailing stop of 50% of profit (first calculated after an acceptable amount of profit, say 25 pips).
My ideal indicator is not actually the ATR but one which looks at each of the previous 14 bars, if none of these bars has a range greater than 15 pips, indicate it on the chart. You're primed for a potential big move. These numbers are for GBP/USD.
I'm sure this has been discussed before, not sure where though.
Thoughts, sneers, tweaks all welcome.
Here are two charts to make it clearer. I'm off to bed.
http://picnac.com/images/7623Untitled 4.jpg
http://picnac.com/images/9775Untitled 3.jpg
Right from when I started trading forex, one of the things I learned was trends don't usually start from opposite trends, they start from periods of low volatility.
With this in mind, I looked at the ATR(14) on the 30mins and hour charts. Can I take a low ATR value as an indication that a new trend/breakout is looming?
Here's what I have in mind:
when the ATR dips below a certain level, place entry orders at the recent (10-14 bars back) high and low. When the price goes through one, the trade is taken. s/l is at the other entry level.
Exits (always the most difficult part) are a trailing stop of 50% of profit (first calculated after an acceptable amount of profit, say 25 pips).
My ideal indicator is not actually the ATR but one which looks at each of the previous 14 bars, if none of these bars has a range greater than 15 pips, indicate it on the chart. You're primed for a potential big move. These numbers are for GBP/USD.
I'm sure this has been discussed before, not sure where though.
Thoughts, sneers, tweaks all welcome.
Here are two charts to make it clearer. I'm off to bed.
http://picnac.com/images/7623Untitled 4.jpg
http://picnac.com/images/9775Untitled 3.jpg