HIGH PROFITS FOREX TRADING STRATEGY. Forex ATR Breakout Trading Strategy with MACD and FR Trend – The Easy and Simple Ways Trade Forex. This Trading System (is an ATR breakout strategy) predicts where there is going to be a breakout in pips by using two main indicators ATR Ratio indicator and MACD indicator.
ATR (Average True Range) is an easy to read technical indicator designed to read market volatility.
When a Forex trader knows how to read ATR, they can use current volatility to gauge the placement of stop and limit orders on existing positions. Today we will take a look at ATR and how to apply it to our trading.
ATR is considered a volatility indicator as it measure the distance between a series of previous highs and lows, for a specific number or periods.
ATR is displayed with a decimal to indicate the number of pips between the period highs and lows. This is important to a trader, as volatility increases so will a charts ATR value. As volatility declines, and the difference between the selected periods highs and lows decrease, so will ATR.
Traders can use ATR to actively manage their position in accordance to volatility. The greater the ATR reading is on a specific pair the wider the stop that should be used.
This makes sense as a tight stop on a particularly volatile currency pair is more prone to be executed. As well a wide stop on a less volatile pair may make stops unnecessarily large. This can also hold true with limit orders.
If ATR is a higher value, traders may seek more pips on a specific trade. Conversely, if ATR is indicating volatility is low, traders may temper their trading expectations with smaller limit orders.
This particular approach is extremely adaptive and can be used over any time frame. Particularly for day trading strategies it can be very useful.
A trader can even use as small a time frame as 15 minutes to determine the entry point of the day.
You have the option to use any time frame, 5-minute, 10-minute ATRs can be generated.
You can also place stop losses to close the trade with even loss if the price returns to a certain specific bar.
- Best Time Frame : M15 or higher.
- Currency pair : EUR/CHF, EUR/GBP, EUR/USD, USD/CHF,
- MACD indicator 5, 15, 1.
- ATR Ratio indicator (7, 21, level 1)>1
This system is great because it’s able to get you in before the breakout happens and is great at predicting when the pip gaining is over.
- MACD Indicator >0.0005
- ATR Ratio Indicator >1.0
- FR-trend blue
- MACD Indicator <-0.0005
- ATR Ratio Indicator >1.0
- FR-trend red
- Exit your trade exactly when the MACD changes direction and ATR both turn and go below <1.
- Fast Profit Target 7-15 pips.
- Place initial stop loss.
Perhaps the biggest problem with this approach is the lack of a system that helps you gauge the exact risk potential.
Also, there is always that possibility that the market might break out either above or below the price level you might be pegging the trade at.