Nexas's Intraday Range Bar Trading

hey Nexas - nobody is doubting you I'm sure.

I would welcome your continued videos.

Congrats, Nexas!! One can see a veteran father and a dedicated trader with minimum "downtime". Well done on all counts! (Been there, done that )

What is your (real) concern, FOURX (if you have any)? Has anyone ever FORCED you to pay for any trade-related knowledge? If you paid at your own will and were later dissatisfied, keep in mind what they say about poker - "If you don't know who the sucker at the table is, it's you"...

Why come to a free party and complain? And what's wrong with a nice video intro? Nobody is making you read this (or any other) thread, here at FF or elsewhere. Even if Nexas has some hidden agenda, that doesn't make this current (free) thread bad. Were he turn commercial, it's not hard to use common sense to reach the "No, thank you!" decision.

My apologies if I misunderstood the nature of your question.

A lot of trend base setups had a hard time last week, not just Nexas' ones. Although I did manage some trend based profits, most of last week's joy came from the "fade the corners" trade I'll describe shortly.

I hope I didn't give you the impression I thought you arrogant. That certainly was not my intent. If I've learned anything in the 5 years I've been trading for a living it's that there's always much more that can be learned and I believe you feel the same way. So I hope we can continue to share observations openly and without any implication of anything other than the desire to help each other make more money.

Hi Scjohn,

Oh sorry... No I was just joking. I was just trying to say exactly what you said. You can never learn too much.

When I read books for example, even if it is complete rubbish, I have learnt what doesn't works, so I am always learning something :-).

But yes you are completely right, we can always learn more, no matter how successful we are.

Nexas

Here's a description of the "fade the corners" trade setup I mentioned in an earlier post. It did quite well last week as it usually does in low ranging weeks or days. Although it can also do well in strongly trending markets (with the proper filters), because of the nature of the beast, very few signals emerge when the markets are moving. So, its role is as a complement to trending setups, not a replacement.

It's primarily a support / resistance trade. I've experimented with many S/R trades to use in non-trending times, usually with middling to poor results. This trade has performed well for a year now. However, some weeks, when the market is moving strongly, there may only be a couple of signals all week. But then, the trend stuff is working so no sweat. But in last week's doldrums, it produced a lot of signals as it usually does when things get tight.

The basic trade is quite simple. Set up a price channel indicator. This indicator simply measures the high and low price overy the last x bars (I use the default setting of 20 bars). It draws upper and lower lines similar to Bollinger Bands. The upper line is the highest price over the last 20 bars, the lower line, the lowest price. Stockcharts.com has a good description of this simple indicator on its Chart School. We're looking for times when the price channel is getting narrower indicating consolidation.

If the last change in price channel has been compression (the upper and lower ranges are moving closer together) rather than expansion, we're looking for price to come very near (~2.5 pips or less) to either the upper or lower channel without breaking through it. Then, we're looking for a range bar that closes moving away from the channel (BTW, this trade only really works well with range bars).

This sounds a lot more complicated than it is, so I'm attaching a picture of the morning of Jan 20 when 4 signals happened in a short period of time. If you look at the picture while reading the stuff below, it will hopefully be clearer.

The white lines are the price channel lines (NinjaTrader calls them Donchian Channels). The other lines are the 100, 60, and 20 EMAs. Note that prior to 5:53 am EST, the price channels moved closer together. Then price touched the upper channel and was rejected. The entry would be immediately after the close of the red bar at point 1. The target is the lower channel. Note that, in the middle of the trade, the target got a bit closer as the channel compressed again between 6:17 and 6:20. Stop is a pip back of the price channel.

We exit just after 6:17 when price hits the lower channel for a 29 pip gain on a 9 pip risk trade.

As the last thing the price channels did was move closer together, we enter long at the close of the next green bar at 6:22 after price hits the lower channel and is rejected. Again, the target is the other price channel. However, this time we're stopped out by a signal in the other direction at 7:49 for a 13 pip gain.

I would guess the signal at point 3 would also eventually qualify as a Nexas trend trade once the trend line broke (while points 1 and 2 would not). This trade hits the lower channel for a 20 pip gain.

Note that point 4 is a valid "fade the corners" signal to go long. However, it gets filtered out for a couple of reasons:
1) We now have a strengthening downtrend. There is considerable angle and separation of the MA's but, more important for me, ADX on the 10 minute chart is above 20 and is ascending signalling a potential strong move. It's okay to fade early, weak, or weakening trends with this trade but not strong ones that are getting stronger.
2) It happens between 8:00 and 8:30 EST. I seldom trade the beginning half hour of the U.S. session as it tends to chop around a lot early.

It's very important that the price channels have moved closer together prior to the signal. The latest move has to have been compression. Trading bounces off an expanding channel is pretty much just shooting craps.

Personally, I filter counter-trend trades using ADX on the 10 minute chart as described above, but any indicator, including MA's, that show a strong (and getting stronger) trend can serve the purpose.

The other thing I use the 10 minute ADX for is to indicate there's been too much of a good thing. I love with-the-trend signals but, once ADX gets above 50, trends tend to tire out and I'm wary of new signals with the trend (for this trade as well as trend trades).

Note that the displacement option on the price channel indicator should be set to zero.

Hey Nexas,

I really enjoy your thread,I do hope it keeps running.

CONGRATULATIONS ,on your newborn

Hi Fourx,

Thank you very much :-) I now have my approval to get two Arsenal Season tickets!

My first Son (I have two girls) and he is just amazing!

I hope it does keep running, I am enjoying it too, it seems like we have some great contribution thus far.

For the record all three of my children will be learning to trade this way

Let games continue!

Nexas

Yes, it does. Thank you. I have also noticed that your full answer to my question was in your video diary for 12.Jan; so I should have gone to... , haha!
And congratulations on your new baby!

Hi Scjohn,

Thank you for that detailed post. It sounds very interesting!

Nexas

Very interesting, thank you.

Looks good.
What pairs do you trade?
Do you trade ranging pairs like EURGBP or EURCHF, too?

Sorry, been out horribly sick!

I used to fly, now I ride a cubicle!

Keep it up, I want some more vids!

-Darren

Thanks Nexas.

A combination of 3 of your 4 pip range trades and one of my "fade the corners" trades (at 9:37 EST) gave me a great U.S. morning session today while the EURUSD was moving inside a tight 39 pip range all session.

I passed on a winning 4 pip range bar Nexas trade at 10:48 EST as the downtrend looked like one of your "non-harmonics" and it had a poor reward risk ratio. But like you say, "What can you do?" The other 3 worked great.

Time to take the dogs for a walk in the woods.

Hi Darren,

Haha that tickled me.What did you fly?

I have my PPL and fly Cessnas although I am currently looking at purchasing a Cherokee. Had any experience with them?

Well you shall have more videos :-)

Nexas

hey scjohn

Any chance you could attach a chart showing your trades, it would be a big help.

Thanks

On this one, I'll go over the "fade the corners" trade. Will do the others later. Have an appointment this afternoon.



The signal came at 9:37 EST. I wasn't wild about it as the target was at only about a 1 to 1 reward / risk ratio. However, it was with the trend and note the bottom of the channel stairstepping up toward a flat upper channel. In my experience, this type of pattern tends to break to the upside and sometimes explosively (especially in such a strong uptrend) so I took the trade.

In order to get a better potential RR ratio, I decided to only exit half of the trade at the upper channel and hope for a breakout. Another quarter would be exited at a 2 to 1 RR ratio, and the last quarter would be a discretionary runner.

9:44 hit the first target.

10:00 moved the stop on the remaining half to a pip below the swing low at 9:54. Now the entire trade was locked into a decent profit.

10:02 hit the second target at 2 RR ratio.

10:20 moved the stop on the remaining quarter to below the swing low at 10:19.

11:00 moved the stop based on the 4 pip range bar (I now had some 4 pip range contracts going) swing low at 10:59.

11:11 Last quarter stopped out at a nice profit. However, stop out was due to dumb mistake. I inadvertently set the stop at the swing low instead of 1 pip below. Stopped out by a half pip. Cost me almost 20 extra pips on the runner. But Nexas rode to my rescue at 11:12 as I took a Nexas 4 pip range trade that did well.

Note: There was a "fade the corners" short signal at 7:45 that was filtered out because, as I said in my earlier post, I don't fade strong trends that are getting stronger.

Thanks scj, but I was more interested in looking at Nexas trades you took.

I do understand your fade the corners method,keep us informed.

Getting older (reflexes aren't what they used to be) and, being basically lazy I only trade the EURUSD forex pair. It tends to move nicely with great liquidity and has very low trading costs. Trading only one pair is why I developed the fade the corners trade -- to have something to trade when things are spotty.

I can make more than I need just trading EURUSD during the U.S. session from 8:30 am EST to about 11:30 am EST, so that's usually what I do. However, sometimes (especially if there's news), I'll trade London from about 4:00 am EST (or whenever I happen to wake up) until about 6:00. Then lunch doldrums tend to set in so I take a break until 8:30.