ATR strategy for trading futuresThe ATR Strategy for trading futures yields another 48 ticks between Crude and the Dow.  Since the higher timeframes were trending down, the only potentials were shorts (at least until a magenta peak comes in).

ATR Strategy for Trading Futures

Trading Crude futures, the 45 minute chart had broken thru the congestion dot and this was the third short trade in the downtrend.  Price had retraced back to the ATR and a ten tick stop was used.  After 15 ticks of profit the aggressive stop kicked in and the trade was stopped out with 22 ticks of profit.  The risk to reward ratio on this trade was 1 to 2.2.

Trading the Dow Jones futures, the 45 minute was clearly in a downtrend and a short entry was generated at the ATR on the lower timeframe.  On entry the stop was ten ticks from entry.  However, the red line (standard stop) began moving down and after fifteen ticks of profit was realized, the yellow stop began moving down aggressively.  The trade was stopped out with 26 ticks of profit per contract.  The risk to reward on this trade was 1 to 2.6.

The video below shows the entry and the stop is set to ten ticks on both from entry.  This gives us a low risk entry into a downtrend and we try to gain at least double the risk for a minimum reward.  However, the ATR strategy for trading futures or forex in essence has 3 built-in stops.  The first was is set from entry (it is input and for Asia and Europe I use about 5 ticks).  The second stop is an automatic flip of the ATR.  In other words, if the ATR stoploss indicator goes from red to blue or blue to red it exits.  The other stop is an aggressive stop once a pre-defined profit amount has been reached.  The combination of these stops allow us to capture as much profits as possible while protecting profits.