Nexas's Intraday Range Bar Trading

Fear not, that comes with experience :-)

The more time in front of the screen you have the better you will become. What is also useful is to look at all of the setups at the end of the day and note down how you would have done had you stuck to the rules. If you do this enough, after a short period of time you will find yourself doing more of the right thing and less of the wrong thing. Then you will start to see consistent profits.

I hope that helps.

Nexas

Hi guys,

Do take a look at this: http://www.forextester.com/

The best $200 a trader can spend on self-education. 1-2 hour session with that programme allows you to "replay trade" a few days' (or weeks') worth of action. Think about it this way: if you cannot make consistent profit with ForexTester, why would real-life results be any different...

Hi Nexas,

Many thanks for your advice. I can see I am on the right track .


Hi 007,

If that simulator has Rbars, it could prove itself useful during late hours and weekends as I haven't encountered anything FOC with Rbars feature.

edit: just noticed that ninjatrader (range bars) has FOC kinetic data feed (end of day), so will try this first.

Here's a suggestion to help mollify the fear and give you confidence to let a trade run. It's an early warning system that can tell you when a trade is likely (never guaranteed) to run a lot or if it's a good idea to take profits early. Almost all indicators, including moving averages are lagging indicators -- they follow price. However, there are a few that, when used in the right way, can be leading indicators -- they hint at where price is likely to go. This does not mean they are always right but the percentages are on your side.

If you've read my earlier posts, you'll know that sometimes I like to swing for the fences and let my trades run a long time -- sometimes the entire position with no early profits. Other times I take profits early and often. This indicator is the prime determinant of how I make that decision.

The indicator's not a proprietary thing. It's simply the Momentum indicator (almost all charting systems provide it free) but you have to use it the way the pros do, which is quite different from the way most new traders use it.

On the morning of the 26th, it helped me turn two of my 4 pip range chart trades into very big winners (one 52 pips) with no fear (well, maybe a little ).

It also can help with getting into trades. In his latest video, Nexas said he was concerned about getting into the EURUSD trade at 4:53 because the 8 pip range chart moving averages (lagging indicators) weren't lined up right. But the momentum indicator (leading indicator) on the 8 pip chart was practically screaming at him to take the trade. In fact, in my trading, lining up the 8 pip chart is an either / or situation. If either the MA's or momentum is on my side, I consider the 8 pip chart in agreement.

Explaining this with examples will be a lengthy post but, if the group's up for it, I'll put it together. Otherwise, I'll PM it to Krisdetrader.

Alright John...lets hear what you got. Or if not you can PM me also.

I hope for it, although i don't trade your system i find it a good one, and i think that this topic deserves a lot of love

Keep it up and good work,

Stefano.

Really, your videos our very, very good. Thanks for posting and please keep updating. (Make sure you get some sleep though)

-Darren

Range Bars have been requested (and promised) for ForexTester since... 2009. That feature is still not available (developers claims it's a very challenging task). So, to be correct, you cannot practice with Range Bars (yet) in ForexTester.

As for Kinetick, it's great. Live feed is USD70 pcm and is very reliable.

Hi Nexas,

Great video today. I was wondering if you take trades into the high/low of the day...now I know

Hi Scjohn,

I am intrigued. I have tried momentum indi (14 bars) but it didn't show me much .

Hi 007,

I have set up kinetic (end of day); doesn't seem to work, needs some tinkering I suppose, but market replay works just fine.

Have a great weekend everyone!

Explaining this with examples will be a lengthy post but, if the group's up for it, I'll put it together. Otherwise, I'll PM it to Krisdetrader.[/quote]


Hi scjohn
If you can spare the time, I would be very interested in how you manage to let profits run. This is something I'm struggling with right now myself. It's easy to just close the trade at the previous swing but sometimes the market offers so much more. I don't want to be greedy, but would like to learn how to take larger profits when they are available. Thanks.

Also, congrats. to Nexas on the new addition to the family. And thanks so much for starting this thread and doing the videos. They are really improving my trading. I'm still on demo but if I keep doing well will take it live soon. Good trades to All.
Mark

John, I'm sure nexus will not mind the size of the post, interesting to find out how the pro's use momentum?.

doc

Let it rip john

Several have asked for an explanation of how I use momentum to stay in trades and I'll post that shortly. However, I'd like to make it clear that most of whatever wisdom appears in the posts concerning this and how I trade does not come from me.

After struggling with trading quite a bit, I was lucky enough to be able to afford to "sit at the feet of the masters" if you will and had two mentorships with 3 different top notch professional traders. One mentorship was with 2 of them and was a full week onsite at their offices. Another was a several-weeks-long online training course by another highly successful trader.

Although they did share several specific setups, most of the work concerned the "theory" of trading and vital basic concepts.

What I thought I would do is go over a couple days trading first that hopefully will show why I do what I do and then go over the momentum indicator and its use in detail.

I'm doing this because I was lucky enough to stumble on this thread and pick up a couple of new ideas from Nexas (I'm always in the market for them) that have helped my trading. Hopefully, this is a way to give a little back.

I'll compare some of my filters with Nexas' filters, not to criticize but to present an alternative in some cases. Nexas, you said you were open for ideas for improvement. If there are any new traders reading this, I'm certain that if you simply trade Nexas' setups and filters as is you will make money and outperform 95% of new traders out there (who will go on to blow up their account and quit trading).

Nexas's setups and filters have the virtue of simplicity and effectiveness. I'm certain my techniques will improve results but at the cost of some simplicity. Life is nothing if not trade offs.

The next post (apparently there's a length limit) will show how easy it is to stay in a big trade using a combination of MA's and Momentum. I'll use a trade from Jan 26 early am. Whenever I have a new toy (the 4 pip range chart), I tend to sometimes get up early and also trade the London session (although usually Tuesday through Thursday only).

The second post will show why I like to use Momentum on the guide chart (the 8 pip) as a filter vs MAs. I'll use the U.S. session on Friday for this but, if you examine enough other trades, based on my experience I'm sure you see similar results. I've been using this particular filter for enough years to not feel the need for an extensive backtest but, if anyone would like to do one, I'll be happy to show them how to set it up.

This was the morning of Jan 26. It was an almost perfect example. Most are a bit more ambiguous. Let's go over the trade first, then I'll explain how the momentum signals are determined.



In long at about 4:30 am EST. Momentum is neutral but both 4 pip and 8 pip MAs are in agreement (green 8).

Hit 2x risk target at 4:32. Momentum is now weak (not strong yet) long so took half off at a profit.

4:35 -- reset stop to swing low at 4:34. If you're going to let trades run, you have to trail your stops in some manner. I like to use mini-swing lows and highs. If you break through them, you've lost one of your reasons to believe in your trade -- you're no longer painting higher highs and higher lows in a long and vice-versa for a short. Note that the reset was not made at the time of the 4:34 bar but simply used the swing low which, at that time, was not confirmed.

4:40 -- reset stop to 4:39 mini-swing low. Now momentum is a strong long signal. This was followed by several more stop resets, all the while both momentum and all six moving averages were moving up nicely.

So, the question from about 4:39 onward was: Why would one even consider getting out of this trade until at least something broke? Price is painting higher highs and higher lows on the trigger chart (4 pip). Momentum is painting higher highs and higher lows on the guide chart (8 pip), and all the MAs are moving up with angle and separation. Getting out of this trade before something breaks is essentially giving up your edge.

Could price have turned around on a dime and bit you? Of course it could have. The market can do whatever it wants whenever it wants. But what's the likely situation? Knowing what I know about momentum made me reasonably comfortable it would likely have sounded an early warning before too much of a price pullback. So the likely situation is for a continuation of gains. Consistently giving up "likelys" for "it coulds" costs a great deal of foregone profits.

At around 4:57, there was a nice Nexas setup. I did not take it as I had already locked in significant profits on the move and still had a half-position runner. Also, it was the first pullback after a parabolic move on the guide chart which made it suspect. As it turned out it hit some nice profit targets.

Finally around 5:08 momentum turned neutral, and I stopped out shortly thereafter, but the runner made a bit more than 51 pips. In this particular trade, the 8 pip MAs alone could have been used as a reason to stay long but, as you'll see in later examples, they can often steer you very wrong. Of course, momentum can also steer you wrong but not nearly as often.

On the next post, I'll discuss how to set up and use the momentum indicator.

This is a look at the 8 pip momentum indicator during the previous trade. (default setting of 14).



Prior to the trade momentum was down. It was below the zero line but, much more important, it was painting lower highs and lower lows.

Once it hit the previous 4:15 high at 4:30 it moved to neutral, then moved to slight up as it broke through it. Then it broke through several previous highs so I considered it a strong up as it broke through the equivalent of heavy resistance on the momentum chart.

Strictly speaking, you're looking for higher highs and higher lows to qualify for a strong up, but I'll often consider a pattern such as what happened at 4:47 as qualifying as a higher low. It's not really a low but you had a weakening of slope followed by a resumption of a steep slope.

After that, momentum stayed strong until 5:09 when it finally painted a lower high. This is not a signal to exit, just a hint that price may be beginning to weaken.

Note also that this is not the way many use momentum. The most simplistic way is: if MO is above the zero line, direction is up, or, if the slope of the line is up, direction is up. My method requires MO to break a previous high or low. And then you really like to see it paint new higher highs and higher lows in an uptrend just like price.

As you'll see in the next post's examples, the value of momentum is that it almost always starts painting lower highs and lower lows in a long (vice versa for a short) before price does or the MAs change direction. And that price very often follows through on the trigger chart after MO changes on the guide chart despite what the MAs are saying.

However, that post will be later (probaby tomorrow) as we're getting ready to go out now.

SC, Thanks for the thorough explanation and for committing so much time at the weekend. Now press the "OFF" button and go and enjoy yourself.

Regards

doc.

Obviously Rangebars devoid of time mean nice wavey charts could have taken a scalpers eternity to form. Attached rangebar time indi adds that element of time in the form of a traffic light system thus giving the trader an idea to the fluidity of the market at that particular moment in time.More suited to the lower rangebar traders :

[Closing Time of the Bar] - [Opening Time of the Bar] <= 1 min then prompt a yellow bar

[Closing Time of the Bar] - [Opening Time of the Bar] >1 min or <=5mins then prompt a orange bar

[Closing Time of the Bar] - [Opening Time of the Bar] >5 min then prompt a red bar

i.e. Yellow means Go - Red means No!!.

hopefully of use to some.

Adiós till next week.

doc.

Hi Scjohn,

I must say, very interesting stuff there!

I have never used this indicator before but will certainly monitor it over the coming weeks, months to see if it can add some to my game.

Already I average around the 1:2 risk:reward but if this helps me achieve the 4, 5 and even 10 times then you have a more or less bullet proof system, especially considering the type of strike rate this system already has... if you are not giving up you strike rate for this, then it is a very nice addition.

Thank you for taking the time.

Nexas

Here's the post I promised which goes over Friday morning's trades (The U.S. session -- I didn't get up early). There are some good examples of how to use momentum on the guide chart (8 pips) to filter trades on the 4 pip chart and to decide whether or not to let them run.

There are several websites that describe the theory behind the momentum indicator -- a Google search will find them easily.

I've received several private messages from new traders asking for more info, so I'll go over Friday in some depth (may take more than one post), then I promise to shut up for a while.

If you're a new trader, remember my way of trading is more complex and you're well advised to stick with Nexas' easier-to-follow technique and make some money while you're deciding whether the added complexity is for you. I only trade one instrument at a time and need to get the most from it. It's difficult to trade a complex technique across several instruments. This is a method that works for me but it may not suit your personality, and trading a method that fits your own head is all important.

We'll start at the 8:00 am EST to 8:30 time slot. In a previous post I said I don't usually trade until 8:30 and this is a good example why.



Two potential losing trades between 8:00 and 8:30 EST. I usually don't start trading till 8:30 and there was a major news announcement scheduled for 8:30. They were supported by the EMAs on the 8 pip guide chart, but not by momentum. The green 8 means the 8 pip EMAs were stacked in favor of a long (20 above 60 and 60 above 100). Red eight means stacked in favor of a short and yellow is indecisive (usually the 20 is in the middle of the 60 and 100)

We got a trend line break at 8:31 with the direction of the 4 pip EMAs, but on the 8 pip chart, neither the EMAs nor Momentum were on board.

At 8:33 another break and this time it was a Fade The Corners trade. A weak upward Mo was against it, but, as I said in an earlier trade, I'll often take a FTC against a weak trend. Upward Mo was weak as, although we broke the previous momentum high, there was no higher low yet and we had not penetrated several highs, only one. As the trade was against Mo, I took half off at 1x risk and, had Mo not turned when it hit the swing low target, would have taken the rest at that target (roughly 2 x risk). However, right before it hit the target, Mo turned to a weak down, so I only took a quarter off and kept a quarter trade runner which eventually stopped out at 8:37 at about the same price.

At 8:41, we got a nice trend break down and Mo was now firmly in a strong down. However, the EMAs on the 8 pip chart were still stacked long. But I'll seldom pass up a strong Mo trade so I took the short. and as you can see from the chart above, it did rather well. Unlike the first trade, this one was with Mo, so my first target for half the trade was the swing low at roughly 2x risk. Then the rest was a runner with stop resets as shown. Finally, the half-trade runner stopped out at +25 pips (4.1x risk). Note that early in the trade, 8 pip EMAs were against the trade (EMAs lined up in the other direction) and they never got better than neutral (Not lined up in the direction but not lined up against it). The chart below shows the 8 range chart at the time of the trade. Mo is firmly on board (lower highs and lower lows), but the EMAs are still stacked up in the long position. They are converging though.



This brings us to 9:00 and is a good place to break. Will do the rest of the morning in another post. There are some other good examples.