On MetaTrader 4 we use a custom indicator called ATR_MTF which is an indicator that gives the Average True Range (ATR) reading of the daily time frame no matter what time frame you are viewing and also ignores the Sunday pre-market bar that appears on MT4 so that data is not used in the calculation.
When the Conquer was first released we traded off of the H4 and H8 time frames. The same exact rules were used for each time frame. As it turns out we moved solely to the 8 hour time frame because the longer period price bars turned out to be a good filter for ‘false entries’ helping control the normal market price fluctuations.
Which Time Frame is more Profitable?
Overall the 8 hour time frame produces a better return. However, a little known secret that only those who were with the group during the 2008 financial crisis are aware of: during high volatility periods the 4 hour time frame is more profitable. Mainly because of the three extra time periods a day which equals extra entries and positions. When the market is moving hundreds of pips a day dropping down to the 4 hour time period is highly recommended. It is more difficult to trade the six signal periods a day rather than the three signal periods on the 8 hour time frame, especially in the middle of the night. However, with the Conquer EA you can just load the expert advisor to the 4 hour charts and enjoy the ride!
But why is the ATR Period Set to DI?
The reason the ATR is used to set both the stop losses and take profit levels is because it is a measure of the market’s current volatility. We all know the markets continually move from periods of contraction to periods of expansion. A currency pair’s ATR will rise when the market is expanding allowing for larger take profits to occur as the market opens up and as the market contract the ATR will also fall which also reduces our stop loss levels. The Conquer V2 is a trend following system that cuts its losses quickly and holds onto winning positions allowing them to run. When the market is contracting trend following systems perform poorly, which for the Conquer equates to small controlled draw down partially because of our favorable risk levels and partially because of our shrinking stop loss levels. This is the same reason why when the market begins to expand we recover quickly from any draw downs and move onto new account highs; since our reward ratios are ranging from 3 to 12 times as much as our risk levels and our take profit levels during periods of expansion are also expanding increasing our profit potentials at the right time.
We use the daily ATRs since this is a swing strategy that is looking to hold onto winning positions. The 8 hour time frame allows for more precise entries into the market but we are gagging our stop loss and take profit levels by the current range of the market using the daily time frame.
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{ 3 comments… read them below or add one }
Hi Jordan,
A question, coming from your post: which timeframe do you recommend for the EA?
I thought you keep 8H.
Now I am not that much convinced about that.
Your suggestion would be highly appreciated.
Thanks and regards
Laszlo
@DonLazlo The 8 Hour time frame is traded and by far more profitable. The only exception to this is when the markets are going crazy like during the 2008 Crisis when we saw ATRs a couple of hundred pips. During that period the 4 Hour time frame was even more profitable than the 8 Hour time frame. When a situation like that occurs again, if Greece defaults or something of that nature, you will know to drop down to the 4 Hour as well as receive an alert from me.
Under normal circumstances which is 99% of the time the 8 Hour time frame is the time frame to trade, more profitable, and what the EA is traded on.
@Jordan| Thank you, Jordan.