Forex trading strategy #23 (Trading with Average Daily Range)
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Average daily range indicator?! Forex Factory
I am a professional Day Trader working for a Prop Fund, Hope I can help people out and answer some questions
Howdy all, I work professionally for a proprietary trading fund, and have worked for quite a few in my time, hope I can offer some insights on trading etc you guys might have. Bonus for you guys Here are the columns in my trading journal and various explanations where appropriate: Trade Number – Simply is this the first trade of the year? The 10th?, The 50th? I count a trade that you opened and closed just one trade number. For example if you buy EUUSD today and sell it 50 pips later in the day and close out the trade, then that is just one trade for recording purposes. I do not create a second trade number to describe the exit. Both the entry and exit are under the same trade number. Ticket Number – This is ticket number / order ID number that your broker gives you for the trade on your platform. Day of the Week – This would be simply the day of the week the trade was initiated Financial Instrument / Currency Pair – Whatever Financial Instrument or currency pair you are trading. If you are trading EUUSD, put EUUSD. If you are trading the EuroFX futures contract, then put in Euro FX. If you are trading the emini S&P, then put in Emini S&P 500. If you are trading a stock, put in the ticker symbol. Etc. Buy/Sell or Long/Short – Did you buy or sell to open the new trade? If you bought something to open the trade, then write in either BUY or LONG. If you sold(shorted) something to open a trade, then write in SOLD, or SHORT. This is a personal preference. Some people like to put in their journals as BUY/SELL. Other people like to write in Long/Short. My preference is for writing in long/short, since that is the more professional way to say it. I like to use the lingo where possible. Order Type – Market or Limit – When you entered the trade was it a market order or limit order? Some people can enter a trade using a combination of market and limit orders. If you enter a trade for $1 million half of which was market order and the other half was limit order, then you can write in $500,000 Market, $500,000 Limit as a bullet points. Position Size / Units / Contracts / Shares – How big was the total trade you entered? If you bought 1 standard lot of a currency pair, then write in $100,000 or 1 standard lot. If you bought 5 gold futures contracts, then write in 5 contracts. If you bought 1,000 shares of stock, then write in 1,000 shares. Etc. Entry Price – The entry price you received entering your opening position. If you entered at multiple prices, then you can either write in all the different fills you got, or specify the average price received. Entry Date – Date that you entered the position. For example January 23, 2012. Or you can write in 1/23/12 . Entry Time – Time that you opened the position. If it is multiple positions, then you can specify each time for each various fill, or you can specify the time range. For example if you got $100,000 worth of EUUSD filled at 3:00 AM EST, and another $100,000 filled at 3:05 and another $100,000 filled at 3:25, then you can write all those in, or you can specify a range of 3:00 – 3:30 AM EST. Entry Spread Cost (in pips) – This is optional if you want to keep track of your spread cost in pips. If you executed a market order, how many pips did you pay in spread. Entry Spread Cost (in dollars) – This is optional if you want to keep track of your spread cost in dollars. If you executed a market order, how many dollars did you pay in spread. Stop Loss Size – How big is your stop loss size? If you are trading a currency pair, then you write in the pips. If you are trading the S&P futures contract, then write in the number of points. If you are trading a stock, then write in how many cents or dollars your stop is away from your entry price. % Risk – If you were to get stopped out of the trade, how much % loss of your equity is that? This is where you input your risk per trade expressed in % terms if you use such a position sizing method. If you risked 0.50% of your account on the trade, then put in 0.50% Risk in dollars – If you were to get stopped out of the trade, how much loss in dollars is that. For example if you have a $100,000 account and you risked 1% on a trade, then write in $1,000 dollars Potential Reward: Risk Ratio – This is a column that I only sometimes fill in. You write in what the potential reward risk ratio of the trade is. If you are trading using a 100 pip stop and you expect that the market can reasonably move 300 pips, then you can write in 3:1. Of course this is an interesting column because you can look at it after the trade is finished and see how close you were or how far removed from reality your initial projections were. Potential Win Rate – This is another column that I only sometimes fill in. You write in what you believe the potential win rate of this trade is. If you were to place this trade 10 times in a row, how many times do you think you would win? I write it in as percentage terms. If you believe the trade has a 50% chance to win, then write in 50%. Type of Inefficiency – This is where you write in what type of inefficiency you are looking to capture. I use the word inefficiency here. I believe it is important to think of trading setups as inefficiencies. If you think in terms of inefficiencies, then you will think in terms of the market being mispriced, then you will think about the reasons why the market is mispriced and why such market expectations for example are out of alignment with reality. In this category I could write in different types of trades such as fading the stops, different types of news trades, expecting stops to get tripped, betting on sentiment intensifying, betting on sentiment reversing, etc. I do not write in all the reasons why I took the trade in this column. I do that in another column. This column is just to broadly define what type of inefficiency you are looking to capture. Chart Time Frame – I do not use this since all my order flow based trades have nothing to do with what chart time frame I look at. However, if you are a chartist or price action trader, then you may want to include what chart time frame you found whatever pattern you were looking at. Exit Price – When you exit your trade, you enter the price you received here. Exit Date – The date you exited your trade. Exit Time – The time you exited your trade. Trade Duration – In hours, minutes, days or weeks. If the trade lasts less than an hour, I will usually write in the duration in minutes. Anything in between 1 and 48 hours, I write in the hours amount. Anything past that and I write it as days or weeks as appropriate, etc. Pips the trade went against you before turning into a winner – If you have a trade that suffered a draw down, but did not stop you out and eventually was a winner, then you write it how many pips the trade went against you before it turned into a profitable trade. The reason you have this column is to compare it to your stop loss size and see any patterns that emerge. If you notice that a lot of your winning trades suffer a big draw down and get near your stop loss points but turn out to be a profitable trade, then you can further refine your entry strategy to get in a better price. Slippage on the Exit – If you get stopped out for a loss, then you write in how many pips you suffered as slippage, if any. For example if you are long EUUSD at 1.2500 and have your stop loss at 1.2400 and the market drops and you get filled at 1.2398, then you would write in -2 pips slippage. In other words you lost 2 pips as slippage. This is important for a few different reasons. Firstly, you want to see if the places you put your stop at suffer from slippage. If they do, perhaps you can get better stop loss placement, or use it as useful information to find new inefficiencies. Secondly, you want to see how much slippage your broker is giving you. If you are trading the same system with different brokers, then you can record the slippage from each one and see which has the lowest slippage so you can choose them. Profit/Loss -You write in the profit and/or loss in pips, cents, points, etc as appropriate. If you bought EUUSD at 1.2500 and sell it at 1.2550, you made 50 pips, so write in +50 pips. If you bought a stock at $50 and you sell it at $60, then write in +$10. If you buy the S&P futures at 1,250 and sell them at 1,275, then write in +25 points. If you buy the GBP/USD at 1.5000 and you sell it at 1.4900, then write in -100 pips. Etc. I color code the box background to green for profit and red for loss. Profit/Loss In Dollars – You write the profit and/or loss in dollars (or euros, or jpy, etc whatever currency your account is denominated in). If you are long $100,000 of EUUSD at 1.2500 and sell it at 1.2600, then write in +$1,000. If you are short $100,000 GBP/USD at 1.5900 and it rises to 1.6000 and you cover, then write in -$1,000. I color code the box background to green for profit and red for loss. Profit/Loss as % of your account – Write in the profit and/or loss as % of your account. If a trade made you 2% of your account, then write in +2%. If a trade lost 0.50%, then write in -0.50%. I color code the box background to green for profit and red for loss. Reward:Risk Ratio or R multiple: If the trade is a profit, then write in how many times your risk did it pay off. If you risked 0.50% and you made 1.00%, then write in +2R or 2:1 or 2.0. If you risked 0.50% and a trade only makes 0.10%, then write in +0.20R or 0.2:1 or 0.2. If a trade went for a loss that is equal to or less than what you risked, then I do not write in anything. If the loss is greater than the amount you risked, then I do write it in this column. For example lets say you risk 0.50% on a stock, but overnight the market gaps and you lose 1.50% on a trade, then I would write it in as a -3R. What Type of trading loss if the trade lost money? – This is where I describe in very general terms a trade if it lost money. For example, if I lost money on a trade and the reason was because I was buying in a market that was making fresh lows, but after I bought the market kept on going lower, then I would write in: “trying to pick a bottom.” If I tried shorting into a rising uptrend and I take a loss, then I describe it as “trying to pick a top.” If I am buying in an uptrend and buy on a retracement, but the market makes a deeper retracement or trend change, then I write in “tried to buy a ret.” And so on and so forth. In very general terms I describe it. The various ways I use are: • Trying to pick a bottom • Trying to pick a top • Shorting a bottom • Buying a top • Shorting a ret and failed • Wrongly predicted news • Bought a ret and failed • Fade a resistance level • Buy a support level • Tried to buy a breakout higher • Tried to short a breakout lower I find this category very interesting and important because when performing trade journal analysis, you can notice trends when you have winners or losing trades. For example if I notice a string of losing trades and I notice that all of them occur in the same market, and all of them have as a reason: “tried to pick a bottom”, then I know I was dumb for trying to pick a bottom five times in a row. I was fighting the macro order flow and it was dumb. Or if I notice a string of losers and see that I tried to buy a breakout and it failed five times in a row, but notice that the market continued to go higher after I was stopped out, then I realize that I was correct in the move, but I just applied the wrong entry strategy. I should have bought a retracement, instead of trying to buy a fresh breakout. That Day’s Weaknesses (If any) – This is where I write in if there were any weaknesses or distractions on the day I placed the trade. For example if you are dead tired and place a trade, then write in that you were very tired. Or if you place a trade when there were five people coming and out of your trading office or room in your house, then write that in. If you placed the trade when the fire alarm was going off then write that in. Or if you place a trade without having done your daily habits, then write that in. Etc. Whatever you believe was a possible weakness that threw you off your game. That Day’s Strengths (If any) – Here you can write in what strengths you had during the day you placed your trade. If you had complete peace and quiet, write that in. If you completed all your daily habits, then write that in. Etc. Whatever you believe was a possible strength during the day. How many Open Positions Total (including the one you just placed) – How many open trades do you have after placing this one? If you have zero open trades and you just placed one, then the total number of open positions would be one, so write in “1.” If you have on three open trades, and you are placing a new current one, then the total number of open positions would be four, so write in “4.” The reason you have this column in your trading journal is so that you can notice trends in winning and losing streaks. Do a lot of your losing streaks happen when you have on a lot of open positions at the same time? Do you have a winning streak when the number of open positions is kept low? Or can you handle a lot of open positions at the same time? Exit Spread Cost (in pips) – This is optional if you want to keep track of your spread cost in pips. If you executed a market order, how many pips did you pay in spread. Exit Spread Cost (in dollars) – This is optional if you want to keep track of your spread cost in dollars. If you executed a market order, how many dollars did you pay in spread. Total Spread Cost (in pips) – You write in the total spread cost of the entry and exit in pips. Total Spread Cost (in dollars) – You write in the total spread cost of the entry and exit in dollars. Commission Cost – Here you write in the total commission cost that you incurred for getting in and out of the trade. If you have a forex broker that is commission free and only gets compensated through the spread, then you do not need this column. Starting Balance – The starting account balance that you had prior to the placing of the trade Interest/swap – If you hold forex currency pairs past the rollover, then you either get interest or need to pay out interest depending on the rollover rates. Or if you bought a stock and got a dividend then write that in. Or if you shorted a stock and you had to pay a dividend, then write that in. Ending Balance – The ending balance of your account after the trade is closed after taking into account trade P&L, commission cost, and interest/swap. Reasons for taking the trade – Here is where you go into much more detail about why you placed the trade. Write out your thinking. Instead of writing a paragraph or two describing my thinking behind the trade, I condense the reasons down into bullet points. It can be anywhere from 1-10 bullet points. What I Learned – No matter if the trade is a win or loss, write down what you believed you learned. Again, instead of writing out a paragraph or two, I condense it down into bullet points. it can be anywhere from 1-10 bullet points. I do this during the day the trade closed as a profit or loss. What I learned after Long Term reflection, several days, weeks, or months – This is the very interesting column. This is important because after you have a winning or losing trade, you will not always know the true reasons why it happened. You have your immediate theories and reasons which you include in the previous column. However, there are times when after several days, weeks, or months, you find the true reason and proper market belief about why your trade succeeded or failed. It can take a few days or weeks or months to reach that “aha” moment. I am not saying that I am thinking about trades I placed ten months ago. I try to forget about them and focus on the present moment. However, there will be trades where you have these nagging questions about they failed or succeeded and you will only discover those reasons several days, weeks, or months later. When you discover the reasons, you write them in this column.
Forex Trading — Average True Range — ATR Indicator. July 27, 2018 at 17:00 . The Average True Range or ATR is a volatility indicator. It measures the range of the session in pips and then determine the average of that range over a certain number of sessions. For example, if using a daily chart with a default setting of 14, the ATR will measure the average daily range from high to low of ... FWIW - if you are calculating ATR based on daily range values over an average month, you should probably use 20 bars (if you like the notion of 4 week "months") or 21 or 22 bars (unless you are calculating off MT4 & it's extra sunday bar...). The reason for the 21/22 bars is that there are 4.33 weeks in an average month, and each week has (usualy) 5 trading days, so the result is 21.65 daily ... Date (GMT): Rate** Average: 1.594161: 31 Dec 1990: 1.784103: 31 Dec 1991: 1.767354: 31 Dec 1992: 1.766306: 31 Dec 1993: 1.501607: 31 Dec 1994: 1.531853: 31 Dec 1995 ... How to calculate ADR (Average Daily Range) It may be easiest to use an excel spread sheet for this. Take the H/L for each day. for the past 14 days. For each day list the amount of pip's between the H and L. Ex. H=1.5623 L=1.5586 5623-5586 = 137 Add the total amount of pip's for all 14 days and divide it by 14. This will give you the average ... 19 Mar 2012 Average Daily Range - indicator for MetaTrader 4. This indicator calculates 5, 10, 20 Average Daily Range. It displays a floating Top/Bottom Price box. This indicator shows signals triggered using Fractals and the original ZigZag indicator. I am going crazy trying to find a custom indicator for MT4 that simply prints on screen the average daily range in pips for the X last periods ... Average daily range indicator?! Post # 1; Quote; First Post: Mar 27, 2017 11:17am Mar 27 , 2017 11:17am Liquidsnake. Joined Jun 2012 Status: Member 259 Posts. Hey all I have been looking with flashlight and hope for a simple goddamn indicator that screens the daily moving average pip move but im unable to find it. Im so frustrated because its the easiest (should be) indicator code there is ... Daily Forex News and Analysis — October 17th 2017. EUR/USD Takes Nosedive. What does Average True Range (ATR) Mean in Forex? October 17, 2017 at 11:55 by K. Prabhu. The ATR is a volatility indicator. It measures the range of the session in pips and then determines the average of the that range over a certain number of sessions. For example, if using a daily chart with a default setting of 14 ...
Forex Trading - Trade Within The Average Daily Range - YouTube
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