Trend Trading the Dow Jones using the Trend ATR strategy is as easy as identifying the trend on the higher timeframe and then entering at the ATR on the three minute chart. Of course, most traders will agree that trend trades are the easiest entry mechanisms using the THD Trend ATR indicator. You simply match colors and use a risk to reward of 1:2. For example, after the ADX magenta peak retracement to the ATR stop on the 45 minute chart, the 3 minute generates and entry into the downtrend. Notice the 45 minute is showing all red. That means shorts only as the ADX histogram bars are not magenta. On the 3 minute, you simply let price retrace to the ATR — which forms resistance. Risking 15 ticks to make 30 ticks.
Trend Trading the Dow Jones Using the ATR Strategy
First, you have to identify the trend of the higher timeframe. This is quite easy with the Trend ATR. If the price bars are red, then you are in a downtrend and the ATR is above price. If the price bars are blue then you are in an uptrend and the ATR is below price.
Second, you go down in time to a three minute chart. The Trend ATR should be the same color. Wait for price to retrace back to the ATR stop loss indicator (plus sign) and then enter. If you know volume analysis, you can even use volume divergence to filter the trades, as well.
The strategy made 18 ticks of profit because entry was at 17791 and price only made a low of 17763 (2 ticks from the profit target of 17761). Although the Risk to Reward was not achieved, the trade was still profitable. Click on the chart below to expand.
An advanced entry would have been at the line of Congestion Dots as they acted as resistance and kept price from moving up. In that case, the Risk to Reward ratio was achieved. Simple rules but quite effective on the live edge.