I would like to contribute with a system of mine that i have used for quite a while with some success. As every system else this one has it’s moments when it work less well and some moments when it works better.
I have always traded this one manually and I don’t know if it’s possible to program to an Expert Advisor. But if someone wants to give it a try it's fine by me. Just go for it.
My way of trading it have been very discretionary. Even if the “rules” are there to follow I have always added some “gut feeling” to it. Whether that’s the reason that this system is a good one for me or not is up to other to decide. I know it works for me and that’s all I need :-)
I call this system ADR Reverser (Average Daily Range Reverser) and it works as follow:
1. First I need to check what kind of range I can expect during the active day. I do this by using the Average True Range indicator that are a standard indicator in MT4. I attach this to the Daily time frame with the Period set to 1. In this way I get o know what each day have had as a daily range. Then I add a Exponential Moving Average into this Average True Range indicator. This can be done by setting the “Apply to:” to “First Indicator’s Data”.
Shift: -1 (This way I get the ADR for 20 days back except for the active day. And since it is the active day I can’t really have that in the calculations.)
MA method: Exponential
So looking at this on this day (2010-03-30) I can expect the daily range to be 127 pips.
Now I switch over to the 1H time Frame and all trading is on that time frame.
2. Secondly I need 2 more indicators….
They are: Awesome Oscilliator and bbsqueeze (attached to this post). The settings for the bbsqueeze are as follow: bolPrd=20 bolDev=2.0 keltPrd=20 keltFactor=1.5 momPrd=12.
The Awesome Oscilliator settings can not be changed and therefore we go for the standard settings.
3. Third… Now the price needs to move X percent of the Average Daily Range. Personally I would like to see a 120% move. Meaning that the Daily range needs to be 120% of the Average Daily Range. In our example it would be 127 * 1.2 = 152.4 pips.
Since the move is calculated from the bottom to the top (or vice versa) it’s important to understand that if daily range starts to get near your target (ADR target) showed by your Average True Range indicator on the daily time frame that you see from were the price have come. If the Target has reached because of a move up we need to aim to a short entry. If the Target has reached because of a move down we need to aim to a long entry.
I suppose that if someone wants to make an EA of this strategy one needs to start calculating from which price level the Target have been made from. Then one knows if the range have been made from a bottom and up or from a top to a bottom.
But I leave that up to the programmers…
4. Fourth. Once we have reached our target we need to look for an entry and here is were Awesome Oscilliator and bbsqueeze comes in to the picture.
Let’s say that the Range have moved from the bottom to the top to create the range we aim for. Then, as said before, we aim to get a short entry and to be a valid entry in this case the Awesome Oscilliator needs to have a smaller value then the previous candle and bbsqueeze also needs to have a smaller value then the previous candle.
5. Fifth. Stopp Loss and Take Profit. I usually puts the SL 5 pips above the highest price level and for this I risk 2%. My take profit usually is the same amount in pips as my stopp loss is. Meaning a 1:1 risk/reward ratio. I also tend to use Martingale for my trades since they are at the most 1 per day I don’t feel that it’s so big risk.
That’s it. I hope you guys understand how this works.
Regards / JoLi
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