ATR is just a range measurement within wich PA advances.
Exit position using Price Action
- Thread starter Rorschach_test
- Start date
ATR is just a range measurement within wich PA advances.
Quote from wrbtrader:
How can you say that ATR would be "more naturally" while at the same time you don't use it, don't understand it based upon the questions you keep asking.
Further, just in case you didn't know it, everything cornix has explained to you so far is easily obtainable on Google and Youtube with tons of chart examples. My point, the ATR is very commonly discussed, demonstrated with videos, charts, books (lots of books), blogs and so on.
http://www.google.com
http://www.youtube.com
http://www.elitetrader.com/vb/search.php?s=
At any of the above links...just type "Average True Range" or type "ATR Indicator".
I apologize in advance if you've already used the above resources and was overwhelmed with the tons of information about the ATR and you just wanted a quick short detailed summary that answers all of your questions involving a trade method via the ATR.
With that said, you started an earlier thread about volatility involving Forex pairs @ http://www.elitetrader.com/vb/showthread.php?s=&threadid=280288
Therefore, I will assume you're interested in the ATR so that your can do your own volatility measurements or attempt to use it as a directional trade signal beyond knowing what's volatile and what is not volatile involving Forex Trading. Simply, it now seems (I could be wrong) you're looking to trade Forex pairs that's the most volatile or increasing in volatility to help you avoid getting into trades of low volatile forex trading instruments.
With the info from your other thread, I think you can fine tune your research involving "ATR Forex trading" and you'll discover several forex forums have dedicated in-depth discussions involving ATR methods. Thus, I recommend you learn those discussions and then bring it here to EliteTrader.com because ET has a Forex section that would welcome ATR discussions @ http://www.elitetrader.com/vb/forumdisplay.php?s=&forumid=38
What forex charting you're using that has the ATR indicator and/or what forex trade execution program you're using ???
P.S. There's an ET sponsor (leveragefx) that's big into ATR for forex trading. You may want to contact them.
Once again,i understand what ATR is,but unable to apply it for the exit purpose,though i`ve seen in many threads people were discussing the exits based on ATR,but without specific.Hope that clear.
Thanks for the external links and suggestions,but i`d like to discuss it here,on ET.
Furthermore,i don`t trade FX,i just was curious on options to measure intradfay volatility.As i said in that thread,for futures i track margin reqs changing,for FX,as we know,there ain`t.And i don`t look fro a super volatile instrument,but on the contrary.Less volatile - the better.
Okay, so we're looking at a pretty decent example of some climactic selling action. You currently have an unsustainable rate of decline spurred on by the breakout of the last few day's up channel.
I'm looking to exit any minute now, no point holding while price makes a more serious dominant traverse to the top of the channel.
At the moment of the charts, there's no reason to exit. However, volume is extremely low as most realize that price can't keep pushing the LTL of the channel further down forever.
The 30m and the 120m are helpful for context, but you can't get caught up in mixing intervals if you're looking for a clear exit signal. If it is the case that we have time to watch and continue to actively manage the position, we'll go with the smallest time-frame for our decisions.
We may have just literally seen a failure of price to continue downwards during the last spike downwards at ~10:00. Our next action depends on the next bar. I am expecting to reverse next bar while seeing a volume increase along with price poking through the current yellow traverse. I'm not hesitant to exit the short since we've already seen two huge volume spikes and price is sitting just above the support area provided by the bottom of the TR.
However, the small chance exists of a continuation that we don't want to rule out yet. If price continues to decrease on rising volume and remains within the yellow channel, we'll keep holding. Pace of price decline has slowed dramatically along with ambient levels of volume, so we're watching quite closely.
If you want to continue bar by bar I will elaborate on my analysis and decisions.
Edit: I'm not a fan of holding futures off RTH (not sure what time-zone you're in) due to the lack of liquidity, volatility, and clear indications of price action. If volume remains static at extremely low levels I would just close the position and re-evaluate during the next open.
I'm looking to exit any minute now, no point holding while price makes a more serious dominant traverse to the top of the channel.
At the moment of the charts, there's no reason to exit. However, volume is extremely low as most realize that price can't keep pushing the LTL of the channel further down forever.
The 30m and the 120m are helpful for context, but you can't get caught up in mixing intervals if you're looking for a clear exit signal. If it is the case that we have time to watch and continue to actively manage the position, we'll go with the smallest time-frame for our decisions.
We may have just literally seen a failure of price to continue downwards during the last spike downwards at ~10:00. Our next action depends on the next bar. I am expecting to reverse next bar while seeing a volume increase along with price poking through the current yellow traverse. I'm not hesitant to exit the short since we've already seen two huge volume spikes and price is sitting just above the support area provided by the bottom of the TR.
However, the small chance exists of a continuation that we don't want to rule out yet. If price continues to decrease on rising volume and remains within the yellow channel, we'll keep holding. Pace of price decline has slowed dramatically along with ambient levels of volume, so we're watching quite closely.
If you want to continue bar by bar I will elaborate on my analysis and decisions.
Edit: I'm not a fan of holding futures off RTH (not sure what time-zone you're in) due to the lack of liquidity, volatility, and clear indications of price action. If volume remains static at extremely low levels I would just close the position and re-evaluate during the next open.
Thanks,that is more clearer.A couple of Q`s.The channels on your chart are not static as i imagine,they are expanding with the price movement.Am i correct?Also,how do you measure the pace of price?(you said,the pace of price decline has slowed)
would be great!
i`m in the GMT+12 TimeZone
I also like the way your drawing the channels.If i`m cprrect,you start with the smallest one,and expand it to several levels.You also use the peaks for the RTL,but expands the lows on the LTL.Can you give some specifics on how you actually draw the channels and what are the limits in extending the LTL?And the last,why there is no yellow channel on the 120M chart?
Thanks
Thanks
ATR is still an indicator. The person that develop the indicator refer to it as an indicator and so do others that have written books about it.
Yet, there's nothing wrong with using indicators with price action if that's what works for you. Just be aware that folks that call themselves "price action traders" do not use indicators except for those confused by the phrase "price action trading".
Like I said before, many discussions with specific details by traders about how they use ATR as an exit method as I explained before.
Therefore, you said you've seen the threads. Did you contact those traders for help ? I will assume you did contact them in those threads here and elsewhere and they didn't reply to explain why you started this thread about ATR exits.
I'm sure you can take the specifics involving ATR exits from those forex discussions at other forums and then discuss them here at ET for trading Crude Oil CL futures. Simply, I don't think the application of the indicator is going to change just because you want to apply it to Crude Oil CL futures.
Yes, you are correct. I expand my channels as price pushes against the LTL if they are not long term channels. The RTL is initially formed from connecting a low and a higher low for bull channel, or a high and a lower high for a bear channel.
For smaller time-frames, the support of the movement [the backbone, if you will], is either the supply or demand, and it is far more important than the other side of the channel. The LTL in these frames is merely a tool I use to view pace.
Let me expand. In regards to the yellow channel, we can see that the most recent down-move only reaches the halfway point when compared to the previous one which formed the floor [LTL] of the channel. This is a clear indication of slowing pace. Price is not able to move as long or as quickly while going down as it was before.
For longer time-frames, trend channels are more of an indication of an oscillation around a value range, with supply and demand more strongly present on either side, so when price pushes past the LTL of one of them, it is a stronger indication of an overbought condition than in smaller time-frames.
However, either way it is a good rule of thumb to start paying closer attention when the LTL of any channel is pushed, as most powerful movements come to an end relatively soon after, or at the very least enter a period of consolidation to catch their breath as traders adjust to a new level of perceived value.
Edit - No yellow or orange on the 120m just because they would be so small that they're really not necessary.
For smaller time-frames, the support of the movement [the backbone, if you will], is either the supply or demand, and it is far more important than the other side of the channel. The LTL in these frames is merely a tool I use to view pace.
Let me expand. In regards to the yellow channel, we can see that the most recent down-move only reaches the halfway point when compared to the previous one which formed the floor [LTL] of the channel. This is a clear indication of slowing pace. Price is not able to move as long or as quickly while going down as it was before.
For longer time-frames, trend channels are more of an indication of an oscillation around a value range, with supply and demand more strongly present on either side, so when price pushes past the LTL of one of them, it is a stronger indication of an overbought condition than in smaller time-frames.
However, either way it is a good rule of thumb to start paying closer attention when the LTL of any channel is pushed, as most powerful movements come to an end relatively soon after, or at the very least enter a period of consolidation to catch their breath as traders adjust to a new level of perceived value.
Edit - No yellow or orange on the 120m just because they would be so small that they're really not necessary.
can you please elaborate on this?how do you figure the clear indication of the slowing down price with LTL?it is contrary to my view,when the LTL expands it`s a clear indication of continuation.or may be there is some sort os misunderstanding on my part.