How NanoTrader makes a simple strategy even better

Most traders use bracket orders in some way. Bracket orders are both a simple strategy and good practice. The trader defines a profit target and a maximum loss. Bad surprises are thus avoided and profits will be taken. Defining a target and a stop was traditionally done in terms of points (or ticks). By allowing traders to use % and the ATR to set bracket orders the platform has opened a whole new realm of exciting possibilities.

The unit of the bracket orders is set in the DesignerBar. The default is ticks. Absolute means points.

But ... you can now also use % and the ATR. Let's look at these individually.

The ATR is the Average True Range. The ATR is the average range in which a financial instruments evolves. If, for example, an index has a 20-day ATR of 100 points, this means the index tends to evolve within a 100-point range every day. This allows some obvious conclusions. If this index is already up 85 points, setting a target of 50 points is a highly unlikely target.

The ATR is per definition high in periods of high volatility and low in periods of low volatility. Good traders will always use the ATR in some way in their trade size calculations -- but this is another story -- and in their stop and their target calculation. Being familiar with the current ATR of the instrument you are trading is crucial! For example, break-out traders in forex will not rarely set their target as 2x ATR and their stop as 1X ATR.

Note: you can add the ATR to your chart via the "Add indicator" button in the DesignerBar.

The second interesting unit to define your bracket orders is the percentage move of the financial instrument you are trading i.e. it is not a percentage of your equity. Say you buy an index at 5000. You could, for example, set as your target a +1% and your stop at -0,5%. Your position will thus be closed either at 5050 or 4975. Many trading books advice traders to think in percentages and work in percentages. This seems to result in more realistic objectives and smaller losses. Try it.