Forex trading strategy #23 (Trading with Average Daily Range)
Submitted by User on July 7, 2009 - 09:20.
Submitted by Ipun
1- Close out any open position
2- Cancel any unexecuted orders
3- Set an Entry Buy order 1 pip above previous high
4- Set an Entry Sell order 1 pip below previous low
5- Set stops and limits using the following guidelines:
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Strategies like this one which use average daily range will always be effective.
good luck!
Thomas
High/Lows from which candle? 1h daily?
Time is 5pm EST? Why?
H/L should be taken for the Daily candles.
5 pm EST is the time when one of the largest markets - US market - closes. Many traders use 5 pm EST as their day closing reference time.
Regards,
Edward
Hi,
I've been trading this system now for a little while and I'm having a problem with calculating the ADR. When the market opens on Sundaynight, there will be a small candle referring to only a few hours. I'm not sure if that has anything to do with the fact that I'm a Dutchman and trade within a different timeframe. In the added file I circeled the smallcandles that arise on that short period.
Can anyone tell me how to calculate it properly?
Regards,
Geert
I see there is a small error in my cirkeldrawingskills there.. It should be the candle on the right side from the cirkels.
Geert.
Hi Geert,
I would not include the Sunday candle into may calculations at all, since we have only few hours of trading on Sunday, while we're talking about Average Daily Range, e.g. how much a currency pair can move on a normal 24 hour day.
Alternatively, if you feel the Sunday should be there, you can visually merge Friday's and Sunday's candles, as if they were one, and take Highs and Lows based on that data.
Best regards,
Edward
This would be a very easy strategy to automate. I assume the stop loss is set immediately after the trade is triggered. For daily time frames the stops seem very close, but on the other hand the take profits are too, given the ADR of the pair being traded. This strategy relies on momentum to get to the take profit before it reverses and hits the stop (which will of course happen at times). For volatile pairs it would be possible play with Risk/reward ratio and get it out too 1:3. Also, by trading multiple lots and taking them off at different points it may be possible to lower risk while letting one lot run for a bit.
Cheers
Neal
Thank you very much for this strategy, but one question I want to ask is how to deal with the second order if one of the order is trigered, or should we leave the second order untill the close of the Day? please help.
by fxtutor.
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