Volatility Thresholds

The JATS PT is the new Swiss Army Knife of Indicators

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Trend following requires trading pullbacks in a trending condition, such as the higher time frame trend or momentum with linear regression.

An easy way that I do this is to setup the UniRenko bars to match the volatility for the bar size I want to trade during the time period I want to trade. I can do this with JATS PT Indicator.

Risk is measured from the distance between 200 EMA and the 1 EMA. I can automate that with the Price Oscillator. So whether I use all of that risk or half risk is up to me. Personally, I like to use as little risk as possible and can use the threshold levels to help me do this in 2 different ways.

  1. Obviously the first way is to use JATS PT2 indicator to help bypass trades that are above a threshold level. That will mitigate risk for the trade as a high vol can often mean the bar is rolling over.

  2. The second way is to use a deep pullback <or> the 200 EMA to signal a double (2 car) entry back in when price comes back and hits 200 EMA in reversal as this shows rejection of the bar rollover.

200 EMA signals

200 EMA signals under the 4 Threshold (low vol)

200 EMA signals over 4 Threshold (high vol down but reverse back up with trend; of course the downside to this is that the bar could just keep going and roll over.)

I can code it either of these 3 ways in BloodHound. But having the price oscillator there telling me that this volatility provides $500 1 contract trades back to the 1 EMA makes the trip worthwhile.

Be careful today for Vixperation, Quarterly Roll on Emini Equity Contracts, and FOMC twist. May want to sit today out and work on strategies.

Trade well~