Not everybody’s long-term strategies. Someone does not have enough patience, someone has a deposit amount that must withstand swaps and volatility. Still, they are interesting in that they can be left in the background, removing the emotional stress. One of these strategies is forecasting price ranges using the DRP2 indicator. The indicator is not very rare, the description of it is relatively easy to find. But if you have problems finding it, write about it in the comments and we will send you its template for free by email.
DRP2 – Price Range Prediction
The idea of this indicator for the classic Metatrader is taken from the publication “Technical Analysis – New Science”, the author of which is Thomas R. Demark. The principle of his work is that he is trying to predict the range of price movement in future periods on the daily interval. On the graph, this forecast is reflected in the form of rectangles, located slightly to the right of the candle. These rectangles are just the predicted value of the price range for the next candle. For the calculation, the High, Low, Close values of the current candlestick are taken.
DRP2 has practically no settings. This is partly good – no need to bother with the selection of numbers. But on the other hand, there is no possibility of its optimization, except for the correction of the code itself. To see its strengths and weaknesses (i.e., pick a currency pair and determine the most successful time to open a position), you need to analyze the signals on historical data.
- timeframe – 1 day;
- asset – EUR / USD;
- DRP2 settings: barsToProcess = 1000. The parameter indicates the number of candles analyzed to calculate the predicted values.
Deals Opening Conditions:
- waiting for the moment when the day candle closes, we place orders after 00.00 EET;
- Buy Limit we put on the level of the Min range, provided that the opening price of a new candle is closer to the maximum value of the range;
- Sell Limit is set at the Max range level, provided that the opening price of the new candle is closer to the minimum value of the range.
Below is an example of a screen for opening a short position: & nbsp;
Insurance orders are set at half the range (Max – Min) / 2 of the opening price of the transaction. The target profit level is 100 points, after which 50% of the transaction is closed, the stop is transferred to the breakeven level. The second 50% of the transaction is fixed after the close of the daily candle.
Trade is not conducted on Monday, and also subject to the size of the range of less than 50 points. The art of making money with this strategy is to choose the minimum value of the range for which a trade is opened (the bigger it is, the better the signals are, but the smaller they are), and the stop-loss distance.
DRP2 is often criticized for inaccurate signals. However, many indicators have this problem. Therefore, if you failed to trade according to this strategy, use DRP2 as a confirming indicator. For example, if at a long position a rectangle appears, symbolizing a rollback (oscillators will not help here), then it makes sense to play it safe with a stop or close part of the deal. There are questions – ask in the comments!