Definition of a trading range - Traders Hideout | futures io social day trading
futures io futures trading


Definition of a trading range
Updated: Views / Replies:3,906 / 18
Created: by trendisyourfriend Attachments:21

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 21  
 
Thread Tools Search this Thread
 

Definition of a trading range

  #1 (permalink)
Elite Member
Quebec
 
Futures Experience: Intermediate
Platform: NinjaTrader wt Rancho Dinero's profiling tools
Broker/Data: Stage 5 trading/AMP/CQG
Favorite Futures: ES, NQ, YM
 
trendisyourfriend's Avatar
 
Posts: 3,698 since Oct 2009
Thanks: 3,041 given, 4,498 received

Definition of a trading range

I am trying to come up with a high level definition of what a trading range is and oddly enough i find it hard to form an accurate definition of what it is. I thought some of you might help me solve this little problem. Basically i see a trading range as a box that contains price on a specific timeframe. There may be price probes outside the box but in these cases price must return within the box to keep the range intact or still active. However, the problem occurs when i try to define the start of a new range or when successive ranges overlap. Think about it as if you had to follow an algorithm or a step-by-step procedure. What steps would you follow to identify a trading range? When does a range start and end ? Try to be as precise as possible in your definition. Let's see if the collective intelligence of futures.io (formerly BMT) could come up with a good definition.

Reply With Quote
The following user says Thank You to trendisyourfriend for this post:
 
  #2 (permalink)
Quick Summary
Quick Summary Post

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.

 
  #3 (permalink)
in a meditative state...
Portugal
 
Futures Experience: Advanced
Platform: Multicharts, Jigsaw
Broker/Data: Stage5, OEC
Favorite Futures: Treasuries
 
arnie's Avatar
 
Posts: 802 since May 2010
Thanks: 709 given, 976 received


Many years ago I established my rules for trading ranges.
After establishing the high and the low for the trading range, I'll create its extension which have 3 areas, 25, 33.3 and 37.5% of the range. While prices won't close above or below the 37.5% extension I consider the range still intact.

For example, look at the simplest of the ranges, a 1 bar range.
After you have the confirmation of an inside bar, you have the confirmation of a 1 bar range and from there you just do the math.
You'll have your range high, your range low and after you calculate its range you just take the 25, 33.3 and 37.5% of it and add to the high and subtract from the low.
Only a close outside the 37.5% confirms that the range was broken and prices are now free to initiate a new movement.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


You just need to establish your trading range and do the math.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


I use the 25, 33.3 and 37.5% but you can use whatever percentages you want. Use what you feel more comfortable with.
I have no idea why but prices love the 25% extension.

If I become half a percent smarter each year, I'll be a genius by the time I die

Last edited by arnie; December 14th, 2012 at 05:46 PM.
Reply With Quote
The following 2 users say Thank You to arnie for this post:
 
  #4 (permalink)
Elite Member
Quebec
 
Futures Experience: Intermediate
Platform: NinjaTrader wt Rancho Dinero's profiling tools
Broker/Data: Stage 5 trading/AMP/CQG
Favorite Futures: ES, NQ, YM
 
trendisyourfriend's Avatar
 
Posts: 3,698 since Oct 2009
Thanks: 3,041 given, 4,498 received

Thanks Arnie, your definition is very similar to what Fat Tails does with his auction bars. But what about if you'd use a range or renko chart, how would you proceed to identify a trading range?

Reply With Quote
 
  #5 (permalink)
Elite Member
las vegas
 
Futures Experience: Intermediate
Platform: Sierra Chart
Broker/Data: Velocity/IB
Favorite Futures: 6E
 
Posts: 1,147 since Feb 2010
Thanks: 304 given, 836 received

Following Arnie's train of thought, maybe define the start of the range by a retracement % or amount. Or maybe short term moving averages, e.g. 10 Hull/T3/LLMA crosses high/low then breakout, reset when ma turns back again and assume in range until broken again or something. Or an oscillator, e.g. in range until TSI crosses +/- 60, then trending one direction until crosses back over the opposite 40 line or something. Or use the swing indicator of a certain strength, possibly with buffer or short-term moving average cross.

Reply With Quote
The following user says Thank You to vegasfoster for this post:
 
  #6 (permalink)
Elite Member
Quebec
 
Futures Experience: Intermediate
Platform: NinjaTrader wt Rancho Dinero's profiling tools
Broker/Data: Stage 5 trading/AMP/CQG
Favorite Futures: ES, NQ, YM
 
trendisyourfriend's Avatar
 
Posts: 3,698 since Oct 2009
Thanks: 3,041 given, 4,498 received

Ideally, i'd like to get close to the definition PrivateBanker has presented in the ES thread. However, he seems to use a loosely defined definition. What i'd like to do is getting a more rigid definition that could be automated.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

Reply With Quote
 
  #7 (permalink)
in a meditative state...
Portugal
 
Futures Experience: Advanced
Platform: Multicharts, Jigsaw
Broker/Data: Stage5, OEC
Favorite Futures: Treasuries
 
arnie's Avatar
 
Posts: 802 since May 2010
Thanks: 709 given, 976 received


trendisyourfriend View Post
Thanks Arnie, your definition is very similar to what Fat Tails does with his auction bars. But what about if you'd use a range or renko chart, how would you proceed to identify a trading range?

Getting 1 bar ranges from Renko or Range bars is really not an option here but you can go higher on the swing to get your range.

See how ES spent all day trading inside the first up swing of the day.
After 2pm the range was broken but prices did come back right in again.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


In hindsight this is pretty easy to draw but let me say that after a while it becomes pretty easy in real time because when you see a rotation higher in size than the previous one you know that something have just changed and as soon you see another rotation now in favor of the previous move you set the previous high as the range high and the previous low as the range low and from there calculate the extensions and see what happen.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).



Of course if you're targeting ranges of 8 ticks or so you'll probably lose yourself on the calculations and when you look prices are long gone.
The rule of thumb here is the more time prices spend inside the range the more valid it is, hence, the probability of some kind of reaction over the extension area.

If I become half a percent smarter each year, I'll be a genius by the time I die
Reply With Quote
The following user says Thank You to arnie for this post:
 
  #8 (permalink)
Elite Member
La Jolla, CA
 
Futures Experience: Master
Platform: Sierra Chart, X_Trader Pro, OptionsCity
Broker/Data: Advantage, Trading Technologies, OptionsCity, IQ Feed
Favorite Futures: CL, NG
 
Private Banker's Avatar
 
Posts: 1,040 since Jul 2010
Thanks: 1,713 given, 3,759 received

I look at trading ranges in a variety of ways with all being fairly discretionary in the sense that there are no laid down mechanical rules. I build the picture from a large time frame and work it down into a micro level which will define trade locations. The macro being the high time frames with the micro being intra-day price levels that are relatively confluent with the bigger picture.

The first way I look for or at a trading range would be by simply creating brackets on the daily, weekly and monthly charts. These brackets are typically anchored at the base of the balancing bars while leaving the excess/tails out of balance which signal rejection areas vs. areas of acceptance. These are more of a visual confirmation vs. a trade location of course.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


The second way of observing or creating a trading range is through a similar process of looking at the daily and weekly TPOs. Again looking for areas of acceptance and rejection.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


The third way I look at trading ranges is through a simple observation of the current price channels in which we're trading in.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).



And lastly, a fourth way I look at a trading range is through various time frames' volatility observable through VWAP and its outer standard deviation levels.

Example of the monthly VWAP. You can see that we've been trading withing last month's VWAP area/value and are now breaking out higher to test the upper standard deviation levels. This move is coming from price finding support at the previous month's lower 1st SD close level and then being supported at the developing month's lower 1st SD level.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


And here's the intra-day ETH VWAP establishing micro levels of support and resistance.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

Reply With Quote
The following 6 users say Thank You to Private Banker for this post:
 
  #9 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 46,240 since Jun 2009
Thanks: 29,354 given, 83,237 received

Al Brooks did a futures.io (formerly BMT) webinar on Trading Ranges:

Webinar: Al Brooks on Trends, Ranges and Reversals

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

Reply With Quote
The following 2 users say Thank You to Big Mike for this post:
 
  #10 (permalink)
Market Wizard
Columbus, OH
 
Futures Experience: None
Platform: NT 8, TOS
Favorite Futures: ES
 
Silvester17's Avatar
 
Posts: 3,332 since Aug 2009
Thanks: 4,579 given, 10,313 received



Private Banker View Post
I look at trading ranges in a variety of ways with all being fairly discretionary in the sense that there are no laid down mechanical rules. I build the picture from a large time frame and work it down into a micro level which will define trade locations. The macro being the high time frames with the micro being intra-day price levels that are relatively confluent with the bigger picture.

The first way I look for or at a trading range would be by simply creating brackets on the daily, weekly and monthly charts. These brackets are typically anchored at the base of the balancing bars while leaving the excess/tails out of balance which signal rejection areas vs. areas of acceptance. These are more of a visual confirmation vs. a trade location of course.

The second way of observing or creating a trading range is through a similar process of looking at the daily and weekly TPOs. Again looking for areas of acceptance and rejection.


The third way I look at trading ranges is through a simple observation of the current price channels in which we're trading in.

And lastly, a fourth way I look at a trading range is through various time frames' volatility observable through VWAP and its outer standard deviation levels.

Example of the monthly VWAP. You can see that we've been trading withing last month's VWAP area/value and are now breaking out higher to test the upper standard deviation levels. This move is coming from price finding support at the previous month's lower 1st SD close level and then being supported at the developing month's lower 1st SD level.

And here's the intra-day ETH VWAP establishing micro levels of support and resistance.


I can see ninja trader again.

btw nice looking mp's

Reply With Quote
The following 2 users say Thank You to Silvester17 for this post:

Reply



futures io > > > Definition of a trading range

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Definition of a trending day Big Mike Traders Hideout 69 August 15th, 2014 05:56 AM
Al Brooks definition: Final Flag ElectricWiz Traders Hideout 9 September 6th, 2013 10:25 AM
Definition of the words Complete and Finished. jocomoco Jokes 0 December 3rd, 2012 09:29 PM
Confused on the definition of drawdown? Rad4633 Emini Index Futures Trading 4 May 21st, 2012 08:15 AM
Is there definition of the MedianRenko? maxima The Elite Circle 3 January 22nd, 2012 07:48 PM


All times are GMT -4. The time now is 10:34 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-16 in 0.16 seconds with 20 queries on phoenix via your IP 54.227.51.103