Forex Sailing
Looking at the ATR(1) you see that 585 pips was the
biggest single week
during that 5 year period. Looking across most of
the other tops you get the
sense that the Usual weekly Maximum (UwM) would be
approximately 425
pips. Getting the AwR is quite easy because the en
d of the line points right at
the number in your ATR(104). Obviously the AwR is
244.
To find the Usual monthly Maximum simply call up th
e monthly chart over
the past 10 years of the currency pair of interest.
For this example we’ll
continue looking at EUR/USD.
Set up an ATR to show one period and a second ATR to
show 48 periods
(four years average). Your chart should look somet
hing like this:
Forex Sailing
Without much explanation (it should be obvious to y
ou by now), I would use
775 for my UmM and my AmR is 496.
Summary of Data
From all of our examples we now know the following i
nformation for the
currency pair EUR/USD.
UdM = ~ 200 pips
AdR = 112 pips
UwM = 425 pips
AwR = 244 pips
UmM = 775
Forex Sailing
Please remember that the above figures are correct a
t the time of this writing
and may not be at all accurate by the time you will
be reading this. Please
repeat the procedures to find all of these numbers
for EUR/USD yourself in
addition to any other currency pair of interest to
you.
Here are a few more words about finding the Usual M
aximums. This isn’t an
exact figure but really just an eyeball – if you re
ally want to you could take
the average of the say the 10 or 15 highest peaks (
this would generally yield a
higher number than the one you’d “eyeball”), but ul
timately an exact number
won’t be any more specifically useful than an appro
ximate one. What you are
looking for is an area that appears to be the maxim
um ceiling for the average,
though recognizing that there have been a few times
that this level has been
penetrated, and likely will get penetrated in the f
uture. I guess I should
instruct you to do it the “proper” way (taking an a
verage of the top dozen
peaks), and I’m sure that it would be somewhat more
useful information, but
telling you to do this would be rather hypocritical
of me since I personally
never do it.
Ok, so what are all of these ATR figures for? The
answer is simple. The
primary purpose of knowing the ATR of the candles y
ou are observing (i.e.
knowing the Daily average if looking at the Daily c
andles) is to assess the risk
and likelihood of the trades you engage to reach th
e success target. Later in
this eBook you will learn a variety of trading tech
niques, and for example,
some of them are based on the amplitudes (how tall)
of the day candles. If
your stop order is placed within the range of the D
aily average (AdR) then
there is a good possibility that you may get stoppe
d out by simple market
fluctuations. Knowing the UdM, and seeing how far
your stop order is in
respect to the UdM then you will know the likelihoo
d of a rogue large day of
stopping you out (but this will happen less often).
Conversely, if you are
doing a “Roulette” trade then you can similarly pre
dict how many days your
trade might last until you either get stopped out o
r limit exit for
profit. Knowing the Usual Maximums and Average Ran
ge of the Weekly and
Monthly perspectives offers you similar foresight a
lthough you are less likely
to engage in trades using such large stops, thus th
ose are mostly used to help
you to determine possible trade duration.
0 التعليقات:
إرسال تعليق