Nexas's Intraday Range Bar Trading

Hi Kadiddle,

I am quite agile as a trader. Ultimately my target is the last swing point, but on occassion I will exit early or later depending on what the price action looks like and the momentum in the market.

I know that is a little hard to grasp and sometimes that approach can obviously burn you, but when you sit in front of the screen all day you do tend to get a feel for the markets.

But if I were to put them into hard rules I would say on a decent pull back exit at the last swing and a breakout trade from a congestion zone should be played with an opposite candle exit.

I hope that clears things up.

Thanks

Nexas

Hi All,

Sorry for no video yesterday or the day before but as I mentioned I had other things to tale care of.

I will try and get one out tonight.

How has everyone been doing?

Nexas

Hi Nexas,

another video would be great! Got some mixed resuslts, but overall profitable.
I should not try to catch some runners, but exit according plan at the last swing point respectively at the color change if the swing point is too near.

PS:
I am a little worried about the (perhaps) coming transaction tax which would make short-term forex trading not profitable at all. Do you know if the futures market (like Kipr is trading) is also affected?

Cheers,
Olarion

Hi everyone.

I've been lurking for a while and testing. During the US a.m. session, I traded this technique with real $ on EURUSD for the first time (8 pip range). Had a good time. Four trades, four winners at 8:20 EST, 9:14, 9:50, and 11:05 (the five bar rule kept me out of a losing short at 10:27).

I've been a full-time trader for five years now and will add this trade to my arsenal. There are a couple of filters (involving a longer-term guide chart) I've found useful in the past that may help this trade's win rate and also the take rate (adds a way to high-percentage scalp in non-trending markets). If it turns out they do, I'll post them.

Thanks for sharing this simple but useful technique.

Hi scjohn............hate to ask a dumb question but what 5 bar rule are you speaking of. Didn't recall seeing that one in this thread. Thanks....Kadiddle

PS I've been watching this thread and now I'm using this setup for the Russell TF, Nasdaq NQ, and the Euro futures contract 6E. Although not a great trading day today, it's picked out some good winners and has kept me out of a lot of whipsaws. Slow markets here in the US. Just simming now but will start trading live within the next few days.

Hi Olarion,

I don't think you have too much to worry about regarding the transaction tax. Unless Germany are involved I can't see it going through and even though Merkel has said she is interested, she also said it is her personal opinion and she needs the agreement of the coalition which she doesn't have at the moment. In any case I am not sure of exactly what it will or won't affect as of yet.

I found that the 4 range has been a little choppy, although it still has been profitable, just a little harder work. The 8 range has been producing better opportunities as we thought it would do. Still trading the two but only taking them in the direction of the 8.

I hope that helps.

Nexas

Hi Scjohn,

Thanks for your contribution, please keep us updated.

Thanks

Nexas

Kadiddle,
In the original post that started this thread on Nov. 21, Nexas said, "Once we have this momentum we then look for the candles to start to pull back, we need a minimum of 4 candles pullback, this means we cannot enter before the 5th candle opens at a bare minimum."

If you look at EURUSD at 10:27, there was a trendline break and all else was in place for the trade but only 4 bars had formed and only 3 were pullbacks. A short taken there would have shorted out.

Another way to look at it is the phenomenum of proportional moves. The 10:27 pullback was not proportional to the prior two pullbacks (it was much smaller) and therefore at least somewhat suspect. The "five bar rule," or whatever you want to call it, makes sure the pullback is substantial.

It also tends to make the turn coincide with retreats from overbought or oversold levels on the stochastic indicator (settings 3,5,2), which is usually a good thing.

Oops, my earlier post should have read stopped out, not shorted out. No electrical problems.

[quote=scjohn;5286955]Kadiddle,
In the original post that started this thread on Nov. 21, Nexas said, "Once we have this momentum we then look for the candles to start to pull back, we need a minimum of 4 candles pullback, this means we cannot enter before the 5th candle opens at a bare minimum."

Oh ok, I realized that. I thought you were requiring another pullback bar, more than the 4. I don't trade the forex but these setups work on the futures just as well.........Kadiddle

Hi Nexas, been following your thread with great interest and taking a few trades. I have watched your 2 vids on youtube and still have a couple of questions for you which need some clarification for me.

In the chart below do you enter the trade at the completion of the candle after the trendline break (single arrows)?

Would you exit your position at the green candles before reaching the swing low (double candles-trades 2 and 3)?

At what point would you move to break even in the following trades?

Thanks

Pete

Hi Pete,

I enter on the open of the candle and not the close. The close would leave too much on the table, for me anyway.

I try not to take profits before the swing point although sometimes when momentum fades I will do. The opposite candle rule is one I use when there is momentum or when I am trading a breakout of a congestion zone.

Moving stops to breakeven is a difficult game. More often than not your trade will reach its target, so moving the stop to breakeven, you can sometimes end up strangling the trade. Having said that, when I do, it is usually once the trade has reached one to one or a mini S&R.

I try not to take trades where the R&R isn't right.

Nexas

Many thanks Nexas, will take on board!

Cheers from oz

Pete

Sorry it was a bit late. I have had some problems trying to render the video.

Hi Nexas,

In my first post, I mentioned that there are some filters I've used in the past that may be helpful here. While it's still only at the interesting anecdote stage, there were some differences in my trades on Jan. 11 vs. the ones you showed in your most recent video. Please accept these comments in the spirit they are intended -- not criticisms but possible helpful suggestions based on years of experience.

I'm on Eastern Standard Time and don't start trading until around 8:15 EST. That's the only reason I missed your first losing trade -- my filter would not have prevented that one. However, the filter did prevent all of the subsequent losing trades and I finished the day with 4 winners and no losers.

An expert trader I've learned a lot from uses the stochastic indicator to filter pullback retracements (I know you like to keep things simple, but this has saved my bacon many times in the past). Based on experience, he uses non-standard settings of 3,5,2. The rule is to wait until both stochastic lines have reached overbought (80 for shorts) or oversold (20 for longs) and have also turned in the direction of the trade.

Waiting for this to happen prevented all your stopouts after the first one. You can check this out by inserting the stochastics indicator with settings 3,5,2 (Ninjatrader's default settings are 5,2,3 so they'll have to be changed). Remember, both lines have to have changed in the direction of the trade). As I said before, it's way too early to tell if the filter will help more than hinder. On Jan. 11, the filter did not eliminate any winners, but there is not doubt that at times it will keep you out of some winning trades. The question for any filter is whether, over time, it prevents more $ losses than $ wins. It's entirely possible given your good reward to risk ratio that the foregone winners may end up being worth more than the losers. There are far too few instances to know this now (and I have not tried to backtest it yet), but this filter has served me well in the past with other setups and it had an auspicious start at least.

Also, and again please don't take this as a criticism as I've done this way more times in the past than I care to remember or will ever admit, but it looks like you ignored one of your rules on the last trade. Your last loss happened after only 3 up bars. In your initial description of your setup you said your required at least 4 bars. Maybe it changed somewhere after that.

Again, I'm fairly certain your setup will be profitable as is and it's elegantly simple, but a couple of filters may improve win rate and reduce drawdown without adding onerous complexity.

Both lines crossing below 80 for a short scjohn?

HI Scjohn.

Thank you for your post. It sounds interesting and is definitely something I will look at to see if it improves the system.

So let me see if I understand what you are saying (I have never really used indicators). We wait until both lines have moved into overbought or oversold territories and then only enter once they both cross back across the lines? Do they need to be lined up in order as well?

Regarding my 4 bar rule. I think I should clarify... what I mean is that I will not enter before the 5th bar, so I won't enter after 2 greens and then 1 red, but I would be happy to enter after 3 greens and 1 red because that would mean I am entering on the 5th bar. Does that make more sense? Sorry if I confused you all.

Nexas

Both stochastic lines don't need to have crossed back over the OB/OS lines, just pointing in the right direction. However, by waiting for both the trendline cross and directional change, they are very likely to have both crossed the lines.

Nexas, I did misread your original description. When you said 4 bars of pullback, I assumed all 4 had to be in the pullback direction (i.e., all greens when pulling back in the long direction and vice-versa). Bad assumption on my part.

By the way, as I said, the jury's still out on the filter. Although this filter has worked for me in the past on other setups and yesterday, it may end up not being net helpful in this particular setup. In fact, today it would have kept you out of two winning trades at 9:50 and 10:03 EST. Filters giveth and filters taketh away.

However, today I was only trading the big news surprises. Few indicators or filters work after huge news. With the unexpected very bad news re U.S. retail sales and unemployment claims, I was in news mode, which is typically to trade in the direction of the news (which today meant be long EURUSD) and then hold on for dear life. So, the filters didn't hurt me today because at 9:50 and 10:03 I was still long since 8:42.

Did have to watch out for the central pivot point today (which is the only pivot point I pay much attention to) as EURUSD was pretty close to it when the news hit. Caused a bit of congestion and chop at first, then took off to the moon. Good day for runners. Also a good day to show the power of the central pivot as, right after the news, EURUSD first had to go down a bit to touch the pivot before taking off in the direction it wanted to go.

Hello everyone,

I just wanted to post something so that I can no longer be called a lurker on this thread. I have been following along, rather intently since the new year and I am very interested with your methodology here, Nexas. I was introduced to range bars through a trading club that was using them. I had mixed results when I was using the method they used, but I was intrigued by the range bars and the way they seemed to filter out some of the noise that was a big part of trading shorter time frames. I have a Ninja Trader platform and I have been trying to find a way to incorporate the range bars into my trading. I think this is a viable option for me, as it seems to be very promising.

I too am in the US Eastern time zone, as SCJohn and thus trade the NY session. I also have traded many indicators, oscillators, and such and have used different methods for filtering my trades. Unfortunately, I have been mostly unsuccessful in finding the right ones and that is part of what brought me here. I like the simplicity of this and the structure (Discipline has been a big part of my failure in the past). It is very clear-cut and there is not much left to my discretion. Stops and such are very clear.

If I were to add anything to what you have here it would be just that I have found levels to be rather important (ie. pivots, support, resistance and round numbers). I have taken some of those into consideration when testing this methodology. If, for instance, there is an R1 just above the recent high that you use as a target, I will use the R1 instead, as the price tends to go to these like magnets. Sometimes it goes flying through them and sometimes comes up short but it often works for me.

Overall, I am impressed with the results I am having here and thank you for sharing and putting in the time to post. I know it is not easy to find time to do this. You are truly paying it forward. THANKS! Oh, and by the way, the lead-in for your video today was very impressive. Looked like something that Dreamworks or some other big Hollywood production company would have.

Keep up the great work and good trading everyone!

Cheers,