DHR - Daily Half Range Strategy

DHR - Daily Half Range Strategy

Conditions:
If price has moved half of the 10 day average range on a given day a trade is entered for 5 pips profit, stoploss 20-30 pips. One trade a day only.

For a buy trade price must have moved half the daily average range (ADR(period 10)), measured from the LOW of the current day.

For a sell trade price must have moved half the daily average range (ADR(period 10)), measured from the HIGH of the current day.

No trades for the first 1-2 hours after market opens to avoid false breakouts.

I trade this method live (small lot size) on EURUSD 15M chart.

Rough and ready testing on EURUSD 15M Chart shows the following results for 2023 Jan to 11 May 2023 so far.

Attached Image (click to enlarge)

Still improvements to be made regarding the few losing trades; testing a few differet options; martingale is a potential option as appears to lose only one trade in a row and then win the next at least 3-4 trades. Potentially a filter for high impact news as whiplash can be more than half daily ATR(10). Maybe look at days of the week etc.

Prefer no other indicators are to be used. Only price, and range such as highs and lows. The rest is via trade management.

This is a pure rule based system.

The indicator list and template in post 1 will be updated periodically as the method is made more precise.


Use auto-refresh indicator to keep DHR lines updated.






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An example of trade yesterday and today:



The buy and sell line move dynamically during the course of the day as the High and Low of the day change.
If the daily high increases so does the sell line.
If the daily low decreases so does the buy line.
Usually there is only one trade during the day.
The strategy can not be eyeball backtested on the screen on most days due to the dynamic movement of the buy/sell lines.
The finally resting place of the buy / sell lines each day has changed significantly from where the trade would have been taken.

In the examples above, price has moved significantly more than the 5 pip target. However the rules remain, as taking 5 pips from a daily range of approximately 20-200 pips puts the probability of winning the trade more towards the trader than the broker.




In the picture above you can see how the buy / sell line have changed through the day until the trade is taken.
The picture shows a trade hitting SL and TP.

Interesting concept, thanks for sharing.

Did you do the coding or know the coder?

I think given that the strategy is only concerned with the current day, the lines should only be visible on today's chart.

Also, if watching many pairs, a Pop-Up alert would be extremely helpful, or later down the track, a dashboard to monitor all the half ranges.

Cheers, and good luck.

Thank you Erebus.

The concept/idea and coding is of my design. I give credit to smilee89 who's threads and comments on FFF made me throw out the indicators (such as RSI, Bollinger Bands etc) as such, and concentrate only on price and think laterally about the problem.

Agree. These can be coded in due course. But appears you have already done it! If you like to share that would be great and appreciated.

I wanted members to grasp the concept first as it can mess with your brain sometimes when looking at the chart; hence your suggestion for the current day only.

The current indicator provided can be restricted to current day by reducing Bars_Back variable.

No, I didn't do anything, I used the bars back as you said, but that changes if you look at 15M vs H1

Another thing that I would do is use a user adjustable percentage of ADR to make the calculation for Take Profit

That is logical to me at least, considering that ADR varies from pair to pair.

And then, you nearly have the basis for an EA, how good and generous is this smilee89 character?

My version...

Here is an existing ADR dashboard indicator; it is also on the earlier chart using the single setting

Here I changed the settings to 1 to 49 as Aqua to show less than half-range

At 50 to 74 they will be Green to represent half-range to 3/4-range; and ready to enter

And from 75 and up to show the higher levels

Here is another thought, perhaps there could be a weekly version or included in the same indicator

Nothing better than a trending week on H4 charts

Agreed. I had thought of that as probably more pips to gain. But focusing on Daily for now as need to perfect one time frame before going on to another.
Using 15M time frame but focusing on daily; use the 15M to see the inner working of the strategy and if there is anything that can be improved.
For example expert advisor testing showed that for a buy trade the last candle high must be below the the buy line.
For a sell trade the last candle low must be above the sell line.

A major finding to point out is that using anything other half the DHR (e.g divide by 1.9, 2.5, 3etc) leads to negative results. This was an unexpected finding.

Updated and tested DHR Line indicator to include pip target and ADR Target.
Will add multi time frame ADR at later date.

Please could the indicator be shared or PM me. Thank you.

Ronin,
Indicator window screenprint.
Indi's and Template to follow.
cpfleger

Indi's and latest Template with Daily V4 Indicator installed.
cpfleger

Thank you. Are you using S&R for the TP?

Ronin,
I do because of my previous systems.
cpfleger

Cookin now...

Rules....

lol! Your welcome.

The rule is because of morning fakeouts and as volatility kicks in so does whiplash and can be caught out. But great result!.

I was in on the first trade too, but stuck to the rules. :-(

The rules are based on backtesting over the last few years, showing one trade a day to be optimal for profit. But happy to be proved wrong, that is what sharing in this forum is about.

The hypothesis of the strategy is that every market has an average / standard range over the day(s). If we find the half way mark of the day based on the average potentially there is some profit to be made on the other side of it. Some days the market moves in one direction for the whole day; this strategy can cope with that. More often, than not the market bounces around forming the standard range until it find a direction. This when to whiplash comes into play and can get caught out if taking too much of the pie.

Ronin,
Excellent system young man....
cpfleger

I can't get any of tou indicators or template to attach to chart. Do you have any idea why this might happen?