Stretch 2.0

Metatrader Indicator (MT4/MT5)

  • Overview

    This indicator calculates and displays the Stretch, as described by Toby Crabel on his book entitled Day Trading with Short-term Price Patterns.

    The Stretch is a Toby Crabel price pattern which represents the minimum average price movement/deviation from the open price during a period of time, and is used to calculate two breakout levels for every single trading day. It is calculated by taking the 10 period SMA of the absolute difference between the open and either the high or low, whichever difference is smaller. This value is used to calculate breakout thresholds for the current trading session, which are displayed in the indicator as two lines.

    Toby Crabel is a self-made millionaire commodities trader who has avoided having a losing year from 1991 to 2002. Among other achievements, he wrote a great trading book entitled Day Trading with Short-term Price Patterns. Reading this book is highly recommended, before trading using this indicator.

    The Opening Range Breakout Strategy

    Using this strategy, the trader places a buy stop just above the open price plus the Stretch and a sell stop just below the open price minus the Stretch. The first stop triggered enters the trader into the trade and the other stop becomes the protective stop.

    Crabel's research shows that the earlier in the trading session the entry stop is hit the more likely the trade will be profitable at the close. A market movement that kicks off a trend quickly in the current trading session could add significant profit to a trader's position by the close and should be considered for a multi-day trade.

    Extending Crabel's research results it is obvious that as time passes and we are not filled early on then the risk increases and it becomes prudent to reduce the size of the position during the day. Trades filled towards the end of the day carry the most risk and the later in the day the trade is filled the less likely the trader will want to carry that trade overnight.

    Opening Range Breakout Preference Strategy

    An ORBP trade is a one sided Opening Range Breakout (ORB) trade. If other technical indicators show a strong trend in one direction then the trader will exercise a preference for the direction in which to trade the ORB trade. A stop to open a position would be placed on the side of the trend only and if filled a protective stop would then be placed.

    The calculation of where to place the "stop to open" would be the same as that for the ORB trade: For longs, the Open price plus the Stretch and for shorts the Open price minus the Stretch.

  • Input parameters
    Input parameters

    When loading the indicator or EA to any chart, you will be presented with a set of options as input parameters. Don't despair if you think they are too many, because parameters are grouped into self-explanatory blocks.

    Strech Timeframe
    The timeframe from which to calculate the stretch (the default is D1).
    Strech Period
    The period for the SMA used to calculate the stretch (the default is 10).
    Moving Average Period
    The period used to calculate the average stretch.
    Max. History Bars
    Amount of past bars to evaluate. Decrease it to speed up the indicator.
  • ? FAQ
    Does the indicator repaint?
    The stretch and average stretch does not repaint. The breakout lines are recalculated -and repainted- for each new trading day.
    Does the indicator implement alerts?
    No, it does not.
  • Comments

    Keep comments tidy and respectful. Avoid spam, offensive remarks, self-promotion and posting personal or payment information. The comment section is for discussion and questions only. Please note that we'll never solicit payments in the comments section.

Screenshots

Stretch Indicator for Metatrader
Stretch Indicator for Metatrader
Stretch Indicator for Metatrader
Stretch Indicator for Metatrader