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in this video traders we look at the five period envelope trade hey guys a very warm welcome to you so this is a five period envelope trade we can use on major indices we can use it's on Forex pairs we use on stocks now basically what we need what have in front of you in the screen now is a 30 minute chart and this one happens to be at the Dow 30 minute chart will show example a second another currency pair with what's called price envelopes on so this could be envelopes in your package could be price envelopes good moving average envelopes the idea is the difference between envelope and other bands is that this will stay at a fixed distance so Bollinger Bands work off standard deviation and will expand and contract accordingly Keltner channels will do the same thing they're based off ATR still expanding of contract accordingly and also as aggressive as the Bollinger's but they'll still change in in width however the price envelopes stay at a fixed percentage with so they're based off a moving average just like the Bollinger Bands are but there is a Pacific fixed percentage width outside of those that the envelopes will stay so the settings we use are v period moving average on the exponential setting you've got it if not simples fine and the percentage band widths I've got at naught point four percent now how do I come up with those the way I come up with that as I really want the bands from high to low to be approximately one daily ATR so the average true range or the most likely range however you want to frame it of the day of that market that those the envelopes I want to use so for the Dow I know it's about 200 points so I'm looking here the high the envelope is twenty four seven thirty two I want the loads be around five thirty two it's around five thirty five that's close enough right that's 200 point range that's my daily ATR I've got on my daily chart check the average true range and I'm using that as a price envelope if we look at usd/jpy same thing I know the daily ATR happens to be 40 pips when I'm doing this video so I look at the high eighty I look at the low on the 40 I'm not far off the mark and the percentage for that would be naught point to know see you can use a formula fact you can go and you can work out and say hey I want to see 40 pips what is 40 bits as a percent expressed as a percentage of the current price that's going to give you your percentage that's the one you plug in to your settings on the indicator so once they're in there you know your band is wide as the daily ATR okay good...