Trading using ATR in Forex Euro Currency Futures resulted in a 23 pips profit while only risking ten ticks. Although the forex markets were moving slowly, the ATR gives traders an entry using minimal risk.
Trading Using ATR in Forex – Strategy
The higher timeframe chart (45 minte in this case) was showing that the market was in a strong downtrend. By identifying the higher timeframe trend, traders know only to take shorts on the lower timeframe. What better place to enter than the ATR? As the chart below shows, price was at the ATR. When we reference the Directional Volume indicator. The yellow arrow identifies the momentum shift as it occurred on the live edge indicating that as price made a high (evidenced by the blue volume bar), sellers came in and took control because the hash mark (“-“) went below zero. In other words, not only is price at the ATR (plus sign on the chart) but as it retraced sellers stepped in and took control. This gives an excellent entry into the downtrend with minimal risk (ten ticks). Since the 45 minute chart was trending down, the trader had the power of the higher timeframe in his favor making this an even more powerful move even though the market is slow because of the holidays.
Trading using ATR in Forex on the Euro Currency Futures entry was at 1.0950 and the exit generated by the Aggressive Stop (yellow dotted line) was at 1.0927. This produced a 23 pip profit while only risking a mere ten ticks or $287.50 per contract in profit while risking $125.00 on entry.
The Trend ATR is included in the TradersHelpDesk Trading Packages. Plus, the ATR strategy will be released early next year for NinjaTrader, TradeStation and Multicharts on a quarterly and annual subscription package. To lease the strategy you will need to be a subscriber of the indicators.