Profitable Average True Range Forex System

Many forex traders don’t have a clue when it comes to set a take profit target for their currency trades. Here’s how the average true indicator can help to calculate a TP level that can be reached easily.

I’ve developed a profitable forex system that consists of 2 indicators, used to generate trade entry signals and one ATR indicator to calculate stop-loss and take profit levels. There’s no second guessing needed with this system.

Chart Setup

Used MT4 indicators: indicatorarrows.ex4, average true range, RSIFilter.mq4 (all default settings)
Preferred time frame(s): 1 min charts and up
Recommended trading sessions: scalping and day trading (London and New York), any session for swing trading (H1, H4) and long-term trading (D1, W1)
Currency pairs: majors and currency crosses

Download

Download The Profitable Average True Range Forex System.

Example: GBP/USD Daily Chart (click the image for full size)

profitable-average-true-range-forex-system

The daily chart above is an example of the ATR forex system in action on the British Pound/US Dollar pair. As you can see from the image, the system issued 9 valid signals (see rules below) and all were winners. Profit target is 60% of the 14 day period ATR value. Place your stop-loss at 70% of the 14 day period ATR value or slightly above/below resistance/support level.

ATR System Trading Rules

Buy trade:

  • RSI Filter orange color (trend up)
  • Indicatorarrows draws green arrow

==> Open buy trade. Place your stop-loss slightly below the most recent support price level or at 70% of the 14 day period ATR, for example, if ATR shows 100 pips, place your stop-loss 70 pips below your entry price.

Take profit method: Use 60% of the 14 day average true range, for example it the ATR over the last 14 days is 100 pips, set your profit target at 60 pips.

Sell trade:

  • RSI Filter blue color (trend down)
  • Indicatorarrows draws red arrow

==> Open sell trade. Place your stop-loss slightly above the most recent resistance price level or at 70% of the 14 day period ATR, for example, if ATR shows 80 pips, place your stop-loss 56 pips above your entry price.

Take profit method: Use 60% of the 14 day average true range, for example it the ATR over the last 14 days is 200 pips, set your profit target at 120 pips.

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