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Definition of a trading range
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Definition of a trading range

  #11 (permalink)
 Vendor: www.auctionprofile.com 
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You mean like this?

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These ranges (balance areas) were determined by my program. The red blocks above and green blocks below the ranges are the target zones for a breakout. At the moment, this only works for ensign, but may develop it for other platforms, starting with ninja. The plots are part of a comprehensive methodology conceptually similar to MP - think of it as a dynamic MP - called Auction Profile.

Note: I intend to start selling this next year, probably around April. If anyone is interested in using the program in beta before then, PM me (you will need to have ensign).

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  #12 (permalink)
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@erniebilko

That's interesting however, the thread is intended to foster discussion or encourage people to share individual perceptions of what a trading range is. How they view it and subsequently once identified what do you do with this information in terms of trading. Instead of trying to recruit new customers for your upcoming product i would much prefer you describe how your zone are identified otherwise it's of no use and it goes against the philosophy of this forum. That said, happy Christmas.


erniebilko View Post
You mean like this?
...

These ranges (balance areas) were determined by my program. The red blocks above and green blocks below the ranges are the target zones for a breakout. At the moment, this only works for ensign, but may develop it for other platforms, starting with ninja. The plots are part of a comprehensive methodology conceptually similar to MP - think of it as a dynamic MP - called Auction Profile.

Note: I intend to start selling this next year, probably around April. If anyone is interested in using the program in beta before then, PM me (you will need to have ensign).


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  #13 (permalink)
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well, the basic definition of a trading range is easy:
it is the spread between the low and high prices traded within a specific time interval.

The "tricky" part here is the specific time interval .
Also, how many times does that price move up and down within its range during the specific time interval?

Numbers, like a trading range, have no meaning by themselves.
They can be useful, if you have an idea about how to turn those numbers into information - and then take action based on it.

When I see a narrow price range that has been going on for a "long" time, combined with some news that I believe is going to push the market out of that range, I'll place my "bet" on a directional move that breaks out of the range coming up shortly.

On the other hand, if I see a wide price range that is going on within "short" periods of time, combined with many ups and downs in between the range's boundaries, I interpret that as uncertainty in the market and simply trade for another price swing within the range.

Trading range is just one of several numbers that we can look at to help us predict the (near) future.

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  #14 (permalink)
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Yes i agree, we need to turn those numbers into actionable information. This is the whole idea behind this thread to use various trading range as a mean to form a trading plan or what-if scenarios ahead of time. This is a very powerfull concept and not discussed often enough with clearly defined heuristic rules. However, there is one thread (by mfbreakout) which is quite practical in this respect and shows a daily application of how a trading range can influence your decision as a trader based on certain notions as explained in this article.



lili View Post
well, the basic definition of a trading range is easy:
it is the spread between the low and high prices traded within a specific time interval.

The "tricky" part here is the specific time interval .
Also, how many times does that price move up and down within its range during the specific time interval?

Numbers, like a trading range, have no meaning by themselves.
They can be useful, if you have an idea about how to turn those numbers into information - and then take action based on it.

When I see a narrow price range that has been going on for a "long" time, combined with some news that I believe is going to push the market out of that range, I'll place my "bet" on a directional move that breaks out of the range coming up shortly.

On the other hand, if I see a wide price range that is going on within "short" periods of time, combined with many ups and downs in between the range's boundaries, I interpret that as uncertainty in the market and simply trade for another price swing within the range.

Trading range is just one of several numbers that we can look at to help us predict the (near) future.


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  #15 (permalink)
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Here are some of the trading ranges i have been tracking over the past few weeks on the CL. The idea is to use these ranges to form a trading plan ahead of time and stay in a trade a longer time and in the end trade less, avoid noisy periods (overlapping bars) and make more money. As you'll note, drawing a range is as subjective as drawing trendlines. One way i found to lower the amount of subjectivity is to use the regression linear tool.

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Last edited by trendisyourfriend; January 11th, 2013 at 07:58 PM.
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  #16 (permalink)
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Following a post i did in this thread want-your-ninjatrader-indicator-created-free i had the pleasure to find in my inbox today an indicator that can be used to display various trading ranges based on time. I thought it would be a good idea to post it in this thread so that others can benefit.

With it you can easily display the opening range as described in the Logical Trader by Mark Fisher, ie, the range of the first 45 minutes on the CL between 8:31-09:15 and the extentions at 00.07t. and 00.13t. above and below that range.

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  #17 (permalink)
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Just wanted to post this chart for the record as an excellent example of bracketing a trading range:

Author: Private Banker, Source: CL Light Crude Analysis TPO-MP-VWAP-VPOC
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Last edited by trendisyourfriend; January 26th, 2013 at 04:13 PM.
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  #18 (permalink)
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Has anyone had any more thoughts on this topic? I've been trying to objectively define a trading range lately as well and haven't yet come up with anything satisfactory. In my case im not looking to automate anything, but am instead trying to succinctly define it in terms of price action.

The definition of a trend is reasonably easy and generally accepted: Higher highs and higher lows, or lower highs and lower lows. Im battling to find such a succinct definition for a range.

A few possibilities:
  • An area of price action where a minimum of two swing highs of approximately the same height and two swing lows at approximately the same level exist
  • An area where price has been unable to make a new swing high or new swing low within the prior X number of swings
  • A minimum of two touches of an upper resistance area and two touches of a lower resistance area while not exceeding either

The problem with the above definitions is that I often find that at the point the above becomes true, typically price will breakout of the range on the next range test. (obviously not all the time, but surprisingly often in my observations). I am therefore trying to define an earlier point in price action where it can be objectively said that we are in a range.

I guess in the end, eye balling it is the best option?

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  #19 (permalink)
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DarkPoolTrading View Post
Has anyone had any more thoughts on this topic?...

Identifying ranges has become a daily routine to identify where price is more likely to attract responsive or initiative activity. I found out that a using a simple bar type that eliminates gaps along with a zig zag indicator is a quick and clean way to do it. I use the option line on close to eliminate the wicks on the bars to lower the noise and better see the S&R lines. This template shows the RTH session.

Here is one example from recent price action:

On this ex. you can see where price is rejected or accepted.

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