High-Precision $5 Level ATR Volatility Tracking Fixed Stop-Loss Strategy

Overview
This is a scalping strategy based on fixed price levels ($5 increments) that combines the advantages of psychological price levels, trend filtering, and volatility-adaptive take profit. The strategy focuses on 1-minute gold charts, executing trades when price touches or crosses $5 integer levels, while using EMA to filter trend direction, and setting fixed stop losses with ATR-based dynamic take profit levels. By trading at important psychological price levels with high frequency, this strategy aims to capture short-term price movements for quick and controlled profits.

Strategy Principle
The core logic of this strategy is based on several key elements:

Price Level Calculation: Using math.round(close/step) * step to round the current price to the nearest $5 integer, creating reference points for trading.

Trend Filtering: Utilizing a 50-period EMA (ta.ema(close, emaLen)) to determine the overall trend direction, only going long when price is above the EMA and short when price is below.

Volatility Calculation: Employing a 14-period ATR (ta.atr(atrLen)) to measure market volatility, used for dynamically adjusting take profit targets.

Entry Signals:

• Long Entry: When price crosses above a $5 integer level and price is above EMA (ta.crossover(close, lvl) and close > emaTrend)
• Short Entry: When price crosses below a $5 integer level and price is below EMA (ta.crossunder(close, lvl) and close < emaTrend)

Risk Management:

• Fixed Stop Loss: Set at entry price minus $5 for long positions, entry price plus $5 for short positions
• Dynamic Take Profit: Based on ATR volatility multiplied by a factor of 1.5 (adjustable), ensuring take profit levels adapt to market conditions
• Opposite Signal Exit: Automatically closes existing positions when an opposite signal appears

Strategy Advantages

1. Simple and Clear Entry Logic: The strategy uses integer price levels as trading triggers, which are often focal points for market participants, increasing the reliability of signals.

2. Combination of Trend and Price Action: By combining EMA trend filtering with price breakouts through psychological levels, the quality of entry signals is improved, avoiding counter-trend trading.

3. Risk-Adaptive Management: Combining fixed stop losses with volatility-based dynamic take profits allows for strict control of maximum risk per trade while flexibly adjusting profit targets based on market conditions.

4. Automatic Reverse Exit Mechanism: Automatically closes positions when opposite signals appear, avoiding holding counter-trend positions and reducing potential losses.

5. Adjustable Parameters: The strategy provides multiple adjustable parameters (EMA length, ATR period, price level step, stop loss magnitude, take profit multiplier) that can be optimized for different market conditions and personal risk preferences.

Strategy Risks

1. High-Frequency Trading Risks: As a scalping strategy on 1-minute charts, trading frequency may be high, leading to accumulated trading costs (spreads and commissions) that erode overall profits. Solution: Add additional filtering conditions to reduce the number of trades, or consider adjusting to higher timeframes.

2. Limitations of Fixed Stop Loss: A fixed $5 stop loss may not be sufficient for sudden high-volatility market conditions. Solution: Consider designing the stop loss as an ATR-based dynamic value to better adapt to different volatility environments.

3. False Breakout Risk: Price may briefly break through psychological levels before quickly retracing, leading to frequent false signals. Solution: Add confirmation mechanisms, such as requiring price to remain near the level for a minimum time or using additional indicators for confirmation.

4. Trend Change Lag: EMA as a trend indicator has some lag, which may generate false signals when trends have just changed. Solution: Consider combining more sensitive trend indicators or price pattern analysis.

5. Market Noise: Noise on 1-minute charts may lead to too many false signals. Solution: Consider adding signal confirmation mechanisms or appropriately increasing the EMA period to reduce sensitivity.

Strategy Optimization Directions

1. Dynamic Stop Loss Design: Change the current fixed $5 stop loss to an ATR-based dynamic value to better adapt to different volatility environments. This allows for more room during high volatility periods and tighter risk control during low volatility periods.

2. Multi-Timeframe Confirmation: Add higher timeframe (such as 5-minute or 15-minute) trend confirmation, only trading when trends across multiple timeframes align, which can significantly improve signal quality.

3. Trading Time Filter: Add time filters to avoid low liquidity or high volatility periods (such as important data release times), which can reduce unexpected risks.

4. Volume Confirmation: Incorporate volume analysis to ensure sufficient market participation when price breaks through psychological levels, reducing false breakout risks.

5. Adaptive Parameter Optimization: Design mechanisms for parameters to automatically adjust based on market conditions (such as cyclical volatility changes), allowing the strategy to better adapt to different market environments.

6. Reversal Price Pattern Recognition: Incorporate price pattern analysis (such as engulfing patterns, doji stars, etc.) to enhance signal reliability, especially for key reversal patterns near psychological price levels.

Summary
The "High-Precision $5 Level ATR Volatility Tracking Fixed Stop-Loss Strategy" is a refined scalping system that combines price psychology with technical analysis. By capturing price interactions with integer levels, combined with trend filtering and intelligent risk management, it creates a simple yet effective trading method. The strategy's main advantages lie in its clear entry logic and flexible risk control mechanisms, making it particularly suitable for fast-paced scalp traders.

By combining fixed stop losses with dynamic take profits, the strategy maintains controlled risk while allowing profits to naturally expand. However, users should be aware of high-frequency trading costs and false breakout risks, and consider further optimizing the system through multi-timeframe analysis, dynamic stop losses, and volume confirmation.

Ultimately, this strategy represents a balanced trading approach that respects both the technical structure of markets (through EMA and ATR) and the psychological behavior of market participants (through integer price levels), providing scalp traders with a reliable framework.

Strategy source code

/*backtest
start: 2025-01-01 00:00:00
end: 2025-04-21 00:00:00
period: 2h
basePeriod: 2h
exchanges: [{"eid":"Futures_Binance","currency":"ETH_USDT"}]
*/

//@version=5
strategy("Scalping 5$ con SL Fisso & TP ATR", overlay=true)

// ───── INPUTS ─────
step      = input.int(5,   "Step livello (in $)",        minval=1)
emaLen    = input.int(50,  "EMA Trend Length",           minval=1)
atrLen    = input.int(14,  "ATR Length",                 minval=1)
slStep    = input.int(5,   "Stop Loss (fisso, in $)",    minval=1)
tpMult    = input.float(1.5, "TP ATR Multiplier",         minval=0.1, step=0.1)

// ───── CALCOLI ─────
// Livelli arrotondati
lvl       = math.round(close/step) * step
// Filtro di trend
emaTrend  = ta.ema(close, emaLen)
// Volatilità ATR
atr       = ta.atr(atrLen)

// ───── SEGNALI DI INGRESSO ─────
longTouch  = ta.crossover(close, lvl)  and close > emaTrend
shortTouch = ta.crossunder(close, lvl) and close < emaTrend

// ───── ORDINI LONG ─────
if longTouch
    slPrice = close - slStep
    tpPrice = close + tpMult * atr
    strategy.entry("Long@5", strategy.long)
    strategy.exit("Exit Long", "Long@5", stop=slPrice, limit=tpPrice)

// ───── ORDINI SHORT ─────
if shortTouch
    slPrice = close + slStep
    tpPrice = close - tpMult * atr
    strategy.entry("Short@5", strategy.short)
    strategy.exit("Exit Short", "Short@5", stop=slPrice, limit=tpPrice)

// ───── CHIUSURA SU SEGNALE OPPOSTO ─────
if strategy.position_size > 0 and shortTouch
    strategy.close("Long@5")
if strategy.position_size < 0 and longTouch
    strategy.close("Short@5")

// ───── PLOT ─────
plot(lvl,      color=color.gray,  title="Livello 5$")
plot(emaTrend, color=color.blue,  title="EMA Trend")

Strategy parameters

The original address: High-Precision $5 Level ATR Volatility Tracking Fixed Stop-Loss Strategy

Comments

[Grace]

Really like the structured approach with the 5-level ATR system—it's a clever way to track volatility more precisely. Pairing it with a fixed stop-loss adds a nice layer of risk control without overcomplicating things. Curious how it performs during sudden volatility spikes, but overall the logic is clear and well thought out. Thanks for sharing the strategy!