Will LRA work on cryptocurrency market?
Don't be a Lucky-trader! Just make cause-and-effect trades!
Gravitation LR (abbr. GLR) is the trading range in which the volume of open “buy & sell” positions accumulates with no significant imbalance, and it is profitable for the market maker to return the price back to the range after the range breakout if there are not enough prevailing loss-making positions to continue price movement in the same direction.
Figure. Averaged graphical representation of the gravitation range
With an increase of a futures liquidity, a probability of strong imbalances in the locked-in ranges decreases, while a probability of an appearance of the gravitation ranges increases. In the future, the gravitation ranges either “lose” open positions and “are canceled”, or turn into the locked-in ranges.
The market has a trend structure when the unidirectional locked-in ranges prevail, and vice versa, the market has a flat structure when the gravitation ranges prevail.
Figure. Averaged graphical representation of the gravitation range
With an increase of a futures liquidity, a probability of strong imbalances in the locked-in ranges decreases, while a probability of an appearance of the gravitation ranges increases. In the future, the gravitation ranges either “lose” open positions and “are canceled”, or turn into the locked-in ranges.
The market has a trend structure when the unidirectional locked-in ranges prevail, and vice versa, the market has a flat structure when the gravitation ranges prevail.
Don't be a Lucky-trader! Just make cause-and-effect trades!
Just a price chart. Only a price chart. Profit/Loss ratio 1:1. Throw a coin. The odds are 50/50.
OBJECTIVE: increase the chances of a 1:1 trade above 50%
How to do it?
- Set prices yourself - Market-making system (already late, all places are taken)
- Analysis of market logic with constant MM - Locked-in Range Analysis (used this?)
Ahh, I think I met LRA (Locked-in Range Analysis) analysis somewhere before, where the author is constantly writing something about the cause-effect trading. Maybe this is the same? No, of course not, **** it. Complicated. I will google and looking again for ready-made profitable strategies for trading, I have seen many sellers give a guarantee of profitability for their strategies, or even better, I will look for an automated trading robot. I searched earlier already, but did not find, I think because I did not spend the Malcolm Gladwell’s 10,000 hours to search. Yes, a robot is a good idea, you don’t even have to do anything, because the market was created just for me to make money out of it by a robot bought for 99 dollars. Everyone will envy me! I’ll ride around the city in my “Lamborghini” and smile at the question “How did you?”. Yes, I always despised that, but if now it is possible, then why not ?
Let's figure out why you still don't have a Lamborghini. Ahh, you prefer a different brand of car ... Forget it, it's not about your virtual choice.
Let's go back to our objective, to increase the chances of a 1:1 trade above 50%.
Why 1:1? Why not 2:1, not 3:1, not 5:1 and not 10:1? Because you 've read and heard that these are the basics of profitable trading.
For profitable trading, you need to learn to honestly ask yourself the question “Why?”. Why is entry here? Why am I entering here for take profit? Why am I exiting here by stop loss? Why am I using a price chart? Why is the time frame like this? Why am I using a volume histogram? Why am I using this indicator? Why exactly this trading terminal? Why did you choose this broker? Ask the question “Why” until you get to the primary source. Otherwise, you are not a trader. You are learned helplessness.
Why LRA?
The answer to this question is fully described in the book “Locked-in Range Analysis: Why most traders must lose money in the futures market (Forex)”. Have you read this? If not, I recommend it.
Why use LR, because open positions can be accumulated “anywhere in the chart”?
They are accumulated. Yes, they are accumulated throughout the chart, from the first transaction on a futures contract to the last price of today. But there is a significant minus in trading days, we do not know where open positions are located. Therefore, considering LR, we increase our chances of correctly determining the accumulation of open positions.
Trader's humor: LRA is the worst way to determine OP, but all other methods are even worse.
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The attentive reader is still waiting for an answer to the question “why 1:1”? Well .. Hi “Statistics”, please help us to answer the question.
The probability distribution of the ratio of the Profit/Loss and the successful outcome of the transaction.
1:1 - 50% chance of a successful outcome
2:1 - 25% chance of a successful outcome
3:1 - 16% chance of a successful outcome
5:1 - 10% chance of a successful outcome
10:1 - 5% chance of a successful outcome
In conditions when a trader is fighting for every percentage increase in expectation, using a ratio higher than 1:1 interferes with the objective. Now the choice is yours.
Why do we need LR?
"Flat Preference" - LR to determine cause-effect take profit. Stop-loss is an unknown variable.
"Trend Preference" - LR to determine the cause-and-effect of stop-loss. Take-profit is an unknown variable.
Defining LR / GLR is possible only on the history. LRA uses the very fact of having a "Locked-in Range" for making trading decisions.
What to trade "Flat Preference" or "Trend Preference"? How to choose? At what moment do you enter the market?
Determining the moment of entry / exit, the direction of the transaction is already the art of trading, this is how each trader differs from the other. There are no guarantees, only probabilities. In this sense, trading is a game. But, the game is not in the sense of casual earnings, but in the sense of who will play the concrete “party” better. And earn more. How can this be not interesting? Trading is a game of intellectuals! But all play in one game, with the same rules.
And how do you play the next "party" you?
P. S.
And yes, if you do not use cause-and-effect method of analysis to make trading decisions, then throw a coin. The chances of a successful outcome will be higher. But do not forget the 1:1 rule. Greed kills.
Don't be a Lucky-trader! Just make cause-and-effect trades!
Update: Aborted mission at break even in the last trade. No follow through after the supply bar, we wanted to see price extending lower, the next bar is an up bar closing firm, it looks like a 2 bar reversal. No point in waiting for your stop to be taken out if you suspect price might retest an area:
Now this is confusing me a bit, kind of throw a wrench in the cogs of the brain. Price is now inside the pocket of low usage of the big profile. So I think I should be looking for nice long setups instead of going for counter trend. This is the problem with the market, you can have to hypothesis for long and short at the same time, and both can be right:
Now this is confusing me a bit, kind of throw a wrench in the cogs of the brain. Price is now inside the pocket of low usage of the big profile. So I think I should be looking for nice long setups instead of going for counter trend. This is the problem with the market, you can have to hypothesis for long and short at the same time, and both can be right:
Hi T8936, On the British Pound chart attached, at which level the LRA range would be validated? Is there a min/max distance for the validation level? Is there a limit between the high/low of the LRA zone above which you would not consider the zone as valid? Would you take another trade from the zone if the market retest the top of the area? Thank you. {image}
Don't be a Lucky-trader! Just make cause-and-effect trades!
Method of analysis: Locked-in Range Analysis
Period: 12 July - 16 July
How did you play these «parties»?
Currency futures:
British Pound, Canadian Dollar, Swiss Franc, New Zealand Dollar
* A maximum potential profit of the Gravitation Locked-in Range
Period: 12 July - 16 July
How did you play these «parties»?
Currency futures:
British Pound, Canadian Dollar, Swiss Franc, New Zealand Dollar
* A maximum potential profit of the Gravitation Locked-in Range
Don't be a Lucky-trader! Just make cause-and-effect trades!
Method of analysis: Locked-in Range Analysis
Period: 8 July - 21 July
How did you play these «parties»?
Futures:
Euro FX, Japanese Yen, Australian Dollar, E-mini Dow ($5), Gold
* A maximum potential profit of the Gravitation Locked-in Range
Period: 8 July - 21 July
How did you play these «parties»?
Futures:
Euro FX, Japanese Yen, Australian Dollar, E-mini Dow ($5), Gold
* A maximum potential profit of the Gravitation Locked-in Range
Don't be a Lucky-trader! Just make cause-and-effect trades!
Method of analysis: Locked-in Range Analysis
Period: 26 July - 30 July
How did you play these «parties»?
Futures:
Euro FX, Japanese Yen, Australian Dollar, Canadian Dollar, New Zealand Dollar, Gold
* A maximum potential profit of the Gravitation Locked-in Range
Period: 26 July - 30 July
How did you play these «parties»?
Futures:
Euro FX, Japanese Yen, Australian Dollar, Canadian Dollar, New Zealand Dollar, Gold
* A maximum potential profit of the Gravitation Locked-in Range
Don't be a Lucky-trader! Just make cause-and-effect trades!
Method of analysis: Locked-in Range Analysis
Period: 1 October - 8 October
How did you play these «parties»?
Futures:
Japanese Yen, British Pound, Australian Dollar, Canadian Dollar, New Zealand Dollar, E-mini NASDAQ 100, Silver
* A maximum potential profit of the Gravitation Locked-in Range
Period: 1 October - 8 October
How did you play these «parties»?
Futures:
Japanese Yen, British Pound, Australian Dollar, Canadian Dollar, New Zealand Dollar, E-mini NASDAQ 100, Silver
* A maximum potential profit of the Gravitation Locked-in Range
Don't be a Lucky-trader! Just make cause-and-effect trades!
Method of analysis: Locked-in Range Analysis
Period: 10 January - 15 January
Currency futures:
Euro FX, Japanese Yen, British Pound, Australian Dollar, Canadian Dollar, Swiss Franc, New Zealand Dollar
* A maximum potential profit of the Gravitation Locked-in Range
Period: 10 January - 15 January
Currency futures:
Euro FX, Japanese Yen, British Pound, Australian Dollar, Canadian Dollar, Swiss Franc, New Zealand Dollar
* A maximum potential profit of the Gravitation Locked-in Range
Don't be a Lucky-trader! Just make cause-and-effect trades!