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ATR TREND FOLLOWING SYSTEM

Quick Facts:

• Category: Trend Following
• Markets: Trending markets (Futures, Forex)
• Timeframes: 15min, 1H, 4H, Daily

Overview

The ATTrader Algorithm uses ATR-based trend detection and position management to capture extended directional moves. The system adapts to current volatility conditions, using wider stops in volatile markets and tighter stops in calm markets.

The algorithm identifies trend direction using ATR-based channels and enters on pullbacks within the trend, riding winners while dynamically managing risk based on market volatility.

How It Works

ATR CHANNEL CALCULATION Dynamic trend channels based on volatility:

• Basis: EMA or SMA of close
  • Upper Channel: Basis + (ATR × channelMultiplier)
  • Lower Channel: Basis - (ATR × channelMultiplier)

TREND DIRECTION Determined by price position relative to channels:

• Uptrend: Close > Basis AND Close[1] > Basis[1]
  • Downtrend: Close < Basis AND Close[1] < Basis[1]
  • Ranging: Close oscillating around Basis

PULLBACK ENTRIES Wait for retracements within the trend:

• Bullish Pullback: Price touches lower channel in uptrend
  • Bearish Pullback: Price touches upper channel in downtrend

VOLATILITY-ADAPTIVE STOPS All stops and targets scale with ATR:

• Stop Loss = Entry ± (ATR × stopMultiplier)
  • Take Profit = Entry ± (ATR × profitMultiplier)
  • Trailing Stop = Highest/Lowest - (ATR × trailMultiplier)

Key Parameters

ATR CHANNEL:

• atrPeriod (14): ATR calculation period
  • channelMultiplier (2.0): Channel width as ATR multiple
  • basisType ("EMA"): "EMA" or "SMA" for basis line
  • basisPeriod (20): Period for basis calculation

TREND DETECTION:

• trendConfirmBars (2): Bars required to confirm trend
  • minATR (0.5): Minimum ATR for trade consideration

ENTRIES:

• entryMode ("Pullback"): "Pullback" or "Breakout"
  • pullbackDepth (0.5): How deep pullback must be (channel ratio)

Best Use Cases

✅ TREND FOLLOWING in trending markets ✅ SWING TRADING with volatility-adjusted risk ✅ POSITION TRADING on higher timeframes ✅ VOLATILITY ADAPTATION across market conditions