On January 7, 2016, I reviewed the ATR Strategy on Dow Jones for the last six months. There was one trade open, which closed yesterday with a total profit of 1,136 points per contract.
Entry is simple using the ATR Strategy on Dow or any other futures. If price retraces to the ATR, an entry is generated. If price flips the ATR (from red to blue or blue to red) then you exit. Otherwise, if price touches the yellow dotted line you exit. This is also known as the Aggressive Stop within the strategy.
Updated Performance Reports for ATR Strategy:
Total Trades: 15
Total Winners: 7
Total Losers: 8
Total Profit/Loss: + 1,925 Points
Largest Losing Trade: -284 Points
Largest Winning Trade: +1158 Points
Actual Risk to Reward Ratio (Total Wins/Total Losses): 1 to 2.02
Again, this is using no filters on entering the trade. No other timeframes, no other indicators, just following one simple rule set — price is at an ATR. However, because we are using the aggressive stop, we are able to trail the market when it is moving strongly in our favor. That means that when the market moves violently in our favor, we are taking advantage of it and increasing our risk to reward on that individual trade, which gives us an overall risk to reward of 1 to 2. This matters because not every trade will move in our favor for the 1 : 2 risk to reward. Sometimes we may only get 1 : 1, sometimes not even 1 : 1. However, by sticking with the ones that take off, we more than make up for the ones that putter out before our ideal target is hit.