FREE FOREX STRATEGIES

#4 Range-bound trading (ATR & Standard Deviation)


Submitted by Manus168

Hello Ed;

I just want to share how to detect Range or Trending Market, but unfortunately this
technique I just try & apply only in EUR/USD at H1 TimeFrame; please feel free to tweak.

Here's The Deal:

At EUR/USD Timeframe H1;
try to put this 2 Indicators: ATR(14) & Standard Deviation(14)
Now here's the rules ...

If you find ATR(14) > then the Standard Deviation(14) it means EUR/USD = Ranging/Sideways.
If you find ATR(14) < then the Standard Deviation(14) it means EUR/USD = Trending.

The Logic behinds is; if the SD is smaller then the ATR it means Market in range of the 14 bars because ATR is measure the range (high to low) of the N bars (in this case 14 bars); BUT if SD is more large then the ATR it means Market break the boundaries of High to Low 14 Bars Range
& the result Market is Trending.

Please feel free for comment Bro Edward.

Happy Trading ;)

Best Regards;

Manus168


Edward Revy,
http://forex-strategies-revealed.com/

Copyright © Forex Strategies Revealed

Nice observation

This looks like a new indicator could be developed: STD(14) minus ATR(14). When above zero, market is trending. When below zero, market is ranging. Also, changes to the slope of this line could tip you off to possible upcoming changes in the market's current status.

Hi Rehadguru..wondering what's the calculation behind the SD & ATR setting as period 21 and EMA 34 & 233. Thank you

I hve been doing some "Tweaking" with this and have found a few improvements that I would like to share.

EURUSD M30: I changed the period to 21 (I like using Fibo numbers for my periods). 13 was to jittery. I colored SD21 Green and ATR21 Red. I added 2 EMAs to the chart. EMA34(Green) and EMA233(Red). I backtested to see when SD21 > ATR21 and came up with the following Enter/Exit Rules
Entry Long: SD21 > ATR21 AND MA34 > MA233 ==> ONLY LONG TRADE
Entry Short: SD21 > ATR21 AND MA34 < MA233 ==> ONLY SHORT TRADE
Exit Long/Short: SD21 < ATR21 ==> EXIT LONG/SHORT

I am evaluating other chart periods (M15, M5). As I shorten the time, I am increasing the periods for the indicators. As an example, M15 makes SD & ATR 42 while EMA34 and EMA233 go to 68 and 466.

I see there can be an argument with the Entry and Exit rules. It is not perfrct and it is a work in progress. However, it seems to hold promise and would appreciate and respect any constructive comments concerning this.

Vince (Rehabguru)
GMT-5

Bless your heart for sharing this info.

Man, that's awsome, I'm searching around with stdev and ATR with moving averages on it for a few days but I never thought comparing the two ! On a daily chart, ATR14 gives me the average candle size (days volatility) while stdev gives the volatility over a period of time. It makes sense to think that even if the market isn't trending anymore the intraday volatility would stay the same (or slow down slower).

I'll do some backtests with my strategy and keep you updated...

What works during trending market? EMA crossover.. if so what period EMA crossovers?

Hi,
The maths is simply the following array with a smooth applied to it.

atr_array[i] = iStdDev(NULL,0,Atr_Std_Period,0,MODE_EMA,PRICE_CLOSE,i)
-iATR(NULL,0,Atr_Std_Period,i)

In asking for the math, I was referring to the trend strength indicator, (brooky) thanks!

S

Hi, What is the calculation for this indicator? I dont use mt so just wondering what the math ws, it seems like adx, after reaching high levels and then a turn, trend reverses..

Hi all.
The Trend Strength Indicator that I have made is based on the same concept as mentioned here.
It plots the rate of change between the Atr and Std at whatever period you choose.
Simply put.
If it is going up the trend is gaining strength.
If it is going down it is losing strength and is either turning into a range or a reversal to be seen soon.
If it is hugging the bottom you are in a ranging market.

I can see this useful as a breakout assistant or as a heads up for a consolidation period. This is in addition too whether you should pay more attention to your trend signals or range signals whichever they may be.
Generally the shorter the time frame the longer the period you should set.
Default is 14.

Chart and Trend Indicator below. Good trading all.

Brooky_Trend_Strength.mq4

SD Indicators is a Standard Deviation; you can find at Metatrader.4 Indicators/Trend/Standard Deviation.

Kind Regards;

Manus168

Plz wher can i find SD indicator

You're welcome; Kind Regards: Manus168


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