From the March 01, 2012 issue of Futures Magazine • Subscribe!

Indicator unearths hidden market insights

Applying the indicator

It’s helpful to maintain the DPR SD indicator on a separate monitor throughout the trading day for occasional review. There is no single indicator that can make a successful trader. Rather, it is the review of a variety of inputs, with price action as the focus, that helps the participant navigate the market profitably.

The first examples of trading with the DPR SD indicator are shown in “Trading with the range” (below) from May 18-19, 2011. The chart gives an idea of how the indicator is put to use. From the May 18 session, we see a trend-up day with the DPR SD level rising consistently throughout the session. If the trader had been lucky enough to be long early in the session, then when the DPR indicated that the average daily price range had been reached, some (or all) profits might be taken.

From the next day’s session, May 19, we see a lesser valued and flat indicator for much of the day. Here the trader is seeing price rotation, and might expect to reduce profit target expectations, or focus on entering by fading the market at price channel extremes. (An alternate view of the price action is that compression was occurring and a breakout might result.)

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