EURUSD — Don’t Read This if You’re Happy With Your FOREX Trading Results
Do you feel that your FOREX trading results could be better? Ever get a bit overwhelmed and irritated that there are so many different tools out there, but none of them provide a good frame of reference for price movements? Do your trades get stopped out more often than you would like them to? What if there was a tool that forecast correctly 80% or more of the time what daily range a currency pair would trade in? Would that help you become a more successful trader?
If you answered yes to any of those questions, then here is a tool that can help. It’s not a magic bullet, although you might think that it is. What is it and why does it work? It has a boring name — Probable Price Range (PPR) — but the results are anything but boring.
There are other tools that on the surface will appear similar, but aren’t the same. There are tools that will give pivot points, ranges, etc. But underneath the hood they aren’t designed to do what PPR — Probable Price Range — is built to do.
So, what is PPR, how is it built, and what is it designed to do? PPR is built based on the fundamental principle that markets are self-balancing and seek their own level. Owing to human psychology, markets move to extremes as fear and greed push prices up and down. Moves up or down in FOREX markets become exhausted and turn in the opposite direction.
PPR is designed to look at the currency markets in the most unbiased way possible. It’s based, in part, on the following:
- Roger Babson’s Action-Reaction Techniques;
- The Golden Ratio;
- Murrey Math;
- Square Root Theory;
- Multidimensional Market Analysis and;
- Cycles and Physics
While some may disagree with any, or all, of the above as a method for analyzing and forecasting price, they share a common thread — there is a mathematical basis behind each of them. They do not rely on complex mathematical transformations that beat and stretch the underlying price numbers. All of the math behind the PPR was originally done using pen, paper and a simple calculator.
The advantage of not relying on complex mathematics, algorithms, etc., is there isn’t any need to keep tuning and retuning the PPR. It keeps working as it was designed to work because it is based on the mathematics behind prices, not on some correlation, algorithm, or theory about how prices ought to work.
Prices move within highly predictable probable ranges. The Golden Mean and Square Root Theory are particularly important in this movement. You could quite easily just those two principles alone and come close to what the PPR does. But, as a trader, why would you want to waste your time reinventing the wheel when you could be finding your next profitable trade?
With the PPR, the difficult work of calculating these ranges on a daily basis has already been done for you. You don’t need to spend your valuable time calculating them. They have a history of a high degree of accuracy as shown below (Current as of July 20, 2017):

There are currently three PPRs for the EURUSD currency pair — PPR1, PPR2, and PPR3. PPR1 is the original PPR, or Probable Price Range. PPR2 should normally be the widest range. It takes into account what would normally be the widest possible price movement, up or down, based on the previous day’s closing price. PPR 3 is a slightly more complex calculation. It looks at where the previous close is in relation to the high and low Probable Price Range and adjusts the range based on that.
OK, so enough talk. Here are the PPRs for today, 7–21–17:
PPR1: 1.1508 — 1.1687
PPR2: 1.1606 — 1.1711
PPR3: 1.1485 — 1.1688
One of the first reactions that some FOREX traders have when looking at these ranges is that they are “too wide”. If they are the only tool you use, then that would probably be true. Keep in mind, the PPRs are designed to capture the full probable daily range, either up or down.
Since Murrey Math is part of the calculation, the ranges become wider and more narrow based on where price currently is. If price is straddling the upper resistance of one range and lower resistance of the range above it, the overall all range will, by definition, be wider. This is designed to protect your investment and warn you of the possibility that price could move against you very strongly at certain times. Will it? It’s hard to say. But wouldn’t you like to be warned that there is a possibility that your stop could be taken out? Wouldn’t you like to know that if the price goes up or down that it might run a little further than you had thought it would, thus allowing you to profit from the move?
One strategy you may consider when using the PPRs is to ignore the bottom of the range if you know or believe the price is trending higher. For example, the EURUSD currency pair has been trending pretty strong upward recently, so you may decide that it is safe to only look at the top of the PPR and use that information in conjunction with your others tools and strategies to place an order, add to your position, sell, move your stop, etc. The strategies are only limited by your own imagination.
If you’re satisfied with your FOREX trading results, it’s doubtful you would have read this far. We’re confident that Probable Price Ranges (PPRs) can help improve your trading. If you would like more information or to comment, please either click on the link below or leave your response at the bottom of this post.
