The PZ Stretch is a pattern by Toby Crabelprice that represents the movement or deviation of the minimum average price of the open price over a while and is used to calculate two break levels for each trading day. It is calculated by taking the period of 10 GHS of the absolute difference between the open, either high or low, and the smallest difference. This value is used to calculate the break-down thresholds for the current trading session, which are shown in the indicator as two lines.
Arturo Lopez Perez created this indicator in June 2015. This developer of indicators and EA’s is very active in the MQL community, where he has created many systems to help traders trade.
Who is Toby Crabel?
Toby Crabel is a self-made millionaire commodity trader who has avoided having a losing year from 1991 to 2002. Among other achievements, he wrote a major negotiating book entitled Trading Day with Short-Term Price Patterns. Reading this book is highly recommended, before operating with this indicator.
The Range Opening Trading Strategy (ORB)
Using this strategy, the trader places a purchase stop just above the open price plus stretching and a stop just below the open price minus stretching. The first triggered stop between the trade and the other stop becomes the stop of protection.
Crabel’s research shows that the sooner in the negotiation session the entry stop is hit, the more likely it is that trade will be profitable at close. A market movement that starts a trend quickly in the current trading session could add a significant benefit to a trader´s position by closing and should be considered for multi-day trading.
Extending the results of Crabel’s research it is evident that as time passes and we do not fill up early, then the risk increases and becomes prudent to reduce the size of the position during the day. The full trades by the end of the day carry the most significant risk and later on the day the trade is filled, the less likely the trader will want to carry out that trade overnight.
Opening Preference Trading Strategy (ORBP)
An ORBP operation is a unilateral Opening Range Breakout (ORB) operation. If the technical indicators show a strong trend in the same direction, then the trader will have a preference for the direction in which the ORB trade. A signal to open a position shall be placed on the side of the trend only and a protective stop shall be placed at that time.
To calculate where to place the “stop to open” will apply the same criteria as for ORB trading: For the lengths, the price Open plus the Stretch, and for the shorts the price Open minus the Stretch.
-The main functional parameters of this indicator are as follows.
-Stretch Timeframe: The term from which the stretch is calculated (the default is D1).
-Stretch period: The period for the SMA used to calculate the stretch (the default value is 10).
-Rolling average period: period used to calculate the average tranche.
-Maximum History bars: Amount of bars passed to evaluate. Decrease to accelerate the indicator.
Despite being an indicator with almost 5 years in the market, it lacks many reviews, but the few that there speak well of the system. The developer makes constant improvements to it. This indicator, friend of the trend too, you can find it in the MQL market for a price of 30 USD, although you have a free demo version to try it out before buying.