50% ATR trading system

This is a system I designed over the last few days. It still needs further backtesting, but so far I've gathered around 150 trades on the EURUSD from 2001 to mid-2012. It's somewhat price-action related, but we are using Average True Range to provide entry signals, rather than a candlestick pattern.

Setup the Average True Range indicator to 14 periods on the Daily Timeframe, High + low /2.

On the daily timeframe, you are looking for candles with a range of less than 50% of ATR(14). The rationale is similar to inside bars and dojis in that a daily candle of less than 50% ATR(14) represents a period of consolidation and indecision.

Here is a visual example.

Entry = break of the high or low + 1 pip

SL = opposite high or low + 1 pip

If you're stopped out in the same day as you enter, re-enter in the opposite direction. For example, yesterday's high is broken in a bullish run and you go long, but then price reverses and stops you out. Re-enter with a short order at yesterday's low + 1 pip (the same place as your stop loss). 

There were 152 trading opportunities for the EURUSD from 2001 to mid-2012. A risk-reward of 2.5 yielded a 40.79% win rate with an expectancy of 39.91% after spread, which is quite good. I ignored swap rates. Equity curve is below with 2% risk per trade.

Don't worry, if results continue to hold with further backtesting, I'll make a future post with more details.