"Ranging Strategy"
Is here Somebody who use something like this?
Or can Some body show me threads in this topic?
THX,
NL
Is here Somebody who use something like this?
Or can Some body show me threads in this topic?
THX,
NL
- #3
- Oct 5, 2006 3:27pm Oct 5, 2006 3:27pm
- Joined Jan 2006 | Status: Monarch o' the Glen | 5,561 Posts
Hi Lacika,
This is a topic that I have spent some time thinking about over for quite some time. The reason is that in my view a trading approach should be multi dimensional. That is you should have a strategy for trading trending markets, and one for ranging markets. The key and major hurdle is coming up with a robust way of defining trending and ranging.
Like a number of others I have a couple of strategies for trading trending markets, and like most they are based on price action and moving averages.
However for ranging markets I have taken one of Joe Ross's setups called a 'Gimme bar'. A quick search on Google will unveil heaps of good reading. But in basic essence this setup is simply to trade a bounce off the upper or lower bollinger bands when price is ranging.
To help me determine when price is ranging or trending I have developed my own indicator called TrendStrength, which based on RSI. The code for this is:
TrendStrength:=EMA(RSI(21),3)-50;
In an easy language desciption it is simply a 21 period RSI that is smoothed and centred around zero.
The way to use this indicator is as follows:
1. When TS is between 10 and -10 price is ranging.
2a. When TS is between 10 and 20 it is trending.
2b. When TS is between -10 and - 20 it is trending.
3. When TS is greater than 20 it is overbought, or less than -20 it is oversold. (Look for divergence trades in this mode)
Now for this setup the first condition is the one that we use. If Price is at the upper BB and TS is between 10 and -10 then we should be looking for a short entry and vice versa.
As they say a picture is worth a thousand words, so here are some great examples of this setup earlier in the year with the Daily Euro.
As a side note if the TS is between 10 and 20 or -10 and -20 (ie trending), and the price pulls back below the 5 period Weighted moving average (dark blue line), and then cross back above it. Then these are very low risk, high probability trades.
Cheers,
Hiachiever
This is a topic that I have spent some time thinking about over for quite some time. The reason is that in my view a trading approach should be multi dimensional. That is you should have a strategy for trading trending markets, and one for ranging markets. The key and major hurdle is coming up with a robust way of defining trending and ranging.
Like a number of others I have a couple of strategies for trading trending markets, and like most they are based on price action and moving averages.
However for ranging markets I have taken one of Joe Ross's setups called a 'Gimme bar'. A quick search on Google will unveil heaps of good reading. But in basic essence this setup is simply to trade a bounce off the upper or lower bollinger bands when price is ranging.
To help me determine when price is ranging or trending I have developed my own indicator called TrendStrength, which based on RSI. The code for this is:
TrendStrength:=EMA(RSI(21),3)-50;
In an easy language desciption it is simply a 21 period RSI that is smoothed and centred around zero.
The way to use this indicator is as follows:
1. When TS is between 10 and -10 price is ranging.
2a. When TS is between 10 and 20 it is trending.
2b. When TS is between -10 and - 20 it is trending.
3. When TS is greater than 20 it is overbought, or less than -20 it is oversold. (Look for divergence trades in this mode)
Now for this setup the first condition is the one that we use. If Price is at the upper BB and TS is between 10 and -10 then we should be looking for a short entry and vice versa.
As they say a picture is worth a thousand words, so here are some great examples of this setup earlier in the year with the Daily Euro.
As a side note if the TS is between 10 and 20 or -10 and -20 (ie trending), and the price pulls back below the 5 period Weighted moving average (dark blue line), and then cross back above it. Then these are very low risk, high probability trades.
Cheers,
Hiachiever
Hi Lacika,
This is a topic that I have spent some time thinking about over for quite some time. The reason is that in my view a trading approach should be multi dimensional. That is you should have a strategy for trading trending markets, and one for ranging markets. The key and major hurdle is coming up with a robust way of defining trending and ranging.
Like a number of others I have a couple of strategies for trading trending markets, and like most they are based on price action and moving averages.
However for ranging markets I have taken one of Joe Ross's setups called a 'Gimme bar'. A quick search on Google will unveil heaps of good reading. But in basic essence this setup is simply to trade a bounce off the upper or lower bollinger bands when price is ranging.
To help me determine when price is ranging or trending I have developed my own indicator called TrendStrength, which based on RSI. The code for this is:
TrendStrength:=EMA(RSI(21),3)-50;
In an easy language desciption it is simply a 21 period RSI that is smoothed and centred around zero.
The way to use this indicator is as follows:
1. When TS is between 10 and -10 price is ranging.
2a. When TS is between 10 and 20 it is trending.
2b. When TS is between -10 and - 20 it is trending.
3. When TS is greater than 20 it is overbought, or less than -20 it is oversold. (Look for divergence trades in this mode)
Now for this setup the first condition is the one that we use. If Price is at the upper BB and TS is between 10 and -10 then we should be looking for a short entry and vice versa.
As they say a picture is worth a thousand words, so here are some great examples of this setup earlier in the year with the Daily Euro.
As a side note if the TS is between 10 and 20 or -10 and -20 (ie trending), and the price pulls back below the 5 period Weighted moving average (dark blue line), and then cross back above it. Then these are very low risk, high probability trades.
Cheers,
Hiachiever
I am not clear how to calculate the TrendStrength in MT4. Do you know how to calcuate your indicator's value in MQ4?
The following site also has an indicatore called TrendStrength, but it is not the same as yours. Not very sure how to use it.
http://strategybuilderfx.com/showthr...hybrid&t=16356
Thanks!
Forex4syg