drt-trading

DRT — Dealing Range Theory 📐

Foundation

• Price is delivered by the IPDA algorithm: it seeks liquidity above old highs / below old lows, and rebalances Fair Value Gaps.
• A Dealing Range forms after a liquidity raid (sweep of a swing high/low).
• Range boundaries: DRH (Dealing Range High) and DRL (Dealing Range Low).
• Price rotates between internal range liquidity and external range liquidity (raids).
• The range is divided into 4 equal quadrants → levels: 25DRT, 50DRT, 75DRT.
  • 25DRT = extreme discount (buy zone)
  • 50DRT = equilibrium (balance)
  • 75DRT = extreme premium (sell zone)
• Buy in discount → sell in premium.

The 3 Types of Dealing Ranges

Type 1 — Continuation ⬆️⬇️

• Situation: After the raid, price continues in the same direction as the raid → trend/continuation toward DRH or DRL.
• What the algorithm does: Delivers price toward the opposite range boundary without a deep retracement.
• Detection: Raid of swing high/low → price breaks through the relative equal levels with displacement (strong candle) → continues.
• Entry: Retest of the broken level or 50DRT after displacement.
• Target: DRH (for longs) / DRL (for shorts) — often 3R+.
• SL: Behind the raid level (sweep extreme + buffer).

Type 2 — Reversal 🔄

• Situation: Raid → reversal back toward the opposite side of the range.
• What the algorithm does: Collects liquidity (raid), reverses, and delivers price toward the opposite quadrant.
• Detection: Sweep of swing high/low → relative equal levels on the opposite side → bias:
  • Equal highs formed first → long bias (toward equal highs)
  • Equal lows formed first → short bias (toward equal lows)
• Entry Model 1: At 25DRT (long) / 75DRT (short) after closure (candle closes above/below the level).
  • Target: opposite side of the range = 3R
  • SL: behind the sweep extreme + buffer (0.5 × ATR)
• Entry Model 2: At 50DRT after displacement (body > 1.5 × ATR).
  • Target: 2R (tighter stop)
  • SL: closer (behind the 50DRT reaction)

Type 3 — Consolidation 📦

• Situation: Range compression — price rotates internally between the quadrants without raiding either side.
• What the algorithm does: Builds liquidity, waits for a trigger.
• Rule: Avoid trades in a Type 3 environment — it wastes trades and lowers win rate.
• Detection: Low ATR relative to the range; price between 25-75 without a raid on either side; low equal highs/lows without a sweep.
• If trading: Only on breakouts with displacement + retest (breakout model).

SMT — Smart Money Technique (confirmation) 🤝

• Divergence between correlated instruments confirms reversal:
  • EUR/USD ↔ GBP/USD — when EU makes a new low but GU does not = bullish SMT → confirms long.
  • DXY ↔ indices/gold — DXY weakness = risk-on.
• Use SMT as a filter: if SMT contradicts the DRT signal → skip the trade.

News filter ⛔

• Avoid trades 15 min before/after high-impact events: FOMC, NFP, CPI, PCE, interest rates.
• Red folder news = flat or out.

Execution windows (CET/Danish time)

• Intraday/scalp: only in killzones (London 09-11, NY AM 14:30-17:00, SB PM 19:30-21:00, ⛔ 15:30-16:00).
• Swing: entry can happen at any time.
• Max 3 trades/day, SL always, journal in TradeVault.

Checklist — BEFORE trade

1. ✅ Is there an established dealing range (DRH/DRL defined after a raid)?
2. ✅ Range ≥ 5×ATR? (backtested: ≥5×ATR = 89.7% WR, ≥7×ATR = 92%)
3. ✅ Is it NY session (15:00-20:00 CET)? (backtested: 15-20 = 80.8% WR)
4. ✅ Which type: Type 1 (continuation) / Type 2 (reversal) / Type 3 (avoid)?
5. ✅ Is price in discount (25DRT) for longs / premium (75DRT) for shorts?
6. ✅ Entry model: 25/75DRT closure (3R) or 50DRT displacement (2R)?
7. ✅ SMT confirmation (EU/GU/DXY)?
8. ✅ No high-impact news in the window?
9. ✅ R:R at least 2:1 — otherwise skip.

Final filters (backtested 31/7, 1h DRT, 2 years, 2,531 trades)

• Only ranges ≥ 5×ATR → 89.7% WR (+NY hours → 92.5%)
• Only NY hours 15:00-20:00 CET → 80.8% WR
• ≥6×ATR + NY → 93.8% WR (144 trades)
• ≥5×ATR + NY → 92.5% WR (226 trades = ~2-3/week) ⭐ RECOMMENDED

Backtest references (1h DRT, 2 years)

• Baseline: 2,531 trades, 71.8% WR, +4741R
• ≥5×ATR: 474 trades, 89.7% WR, +1226R
• ≥5×ATR + NY hours: 226 trades, 92.5% WR, +610R
• Primary instruments: GBP/USD (71.8%), XAU/USD (72.6%), US30 (70.3%), XAG/USD (70.4%)
• Scripts: tradevault/scripts/backtest_drt.py, backtest_drt_v2.py, backtest_combo.py