Trend Trading Range Bar Charts

Hi All,

As you probably know I love trading range charts. I started trading them many years ago as they just made sense to me and have been trading them ever since.

I trade pretty much naked range charts with just a few moving averages for good measure :-)

I will post the trades I take with charts and I encourage you all to do the same.

I don't mind if you trade them a different way to me but I would prefer to keep this thread specifically to range trading.

Nexas

Here's the first trade I took this week.

Nexas,

can you please share your MA's setting?
(sorry my bad, didn't pay attention to info on the top of the chart)

I think you can see it in his chart. EMA 20,60,100

HI Nexus, I have tried using range bars to observe the price movement after reading your other thread. The advantage of this charting is that it tells us the price range behaviors at different levels. However, I have not be able to find a good method to capitalized on the use of the range chart. Somehow I feel there is something missing which can help to give a more accurate reading for entry and exit plus a higher probability rate of winning.

The search goes on for me.......

Hi TraderInc,

I know what you mean... it was the same for me before. What I do now is always utilize regular TA methods (S&R, Fibs, Trend Lines) in conjunction with a slightly enhanced entry method to my previous one. What is that entry method... well ultimately it is wait for two consecutive bars in the direction of the trend... these need to be strongish bars as well.

Nexas

I quite like the look of the EURUSD. Although we need a pull back to the 1.3550 mark for it to be valid... lets see what we get this afternoon.

Hi Nexas,

I have read your other thread and I am very happy to see a group of traders come together and share their ideas about a common charting method.

I don't post much on FF anymore because of a lot of the arguing that goes on. It's just not my style :-) I would be happy to share some things here with folks and truly hope this thread remains civil.

Cheers!

Hi All,

Thank you for your contributions... I agree all we want is a nice civil discussion on the markets!

The EURUSD looks like it is going to turn... lets see.

Nexas

In an effort to help some of the newer folks I will try to hopefully add some ideas that will spark some things in your mind. Many new traders make a mistake of adding too much on their charts and getting confused when trying to decide which way the market is going to go. So I want to make something very clear here. Make up your own mind as to which way the trend is going and trade in that direction. Establish some rules that determine whether it is in an up trend, down trend or consolidating to make either a continuation or reversal.

Range bars are unique in that they allow us to apply some simple support and resistance rules to defining a trend because they are so easily depicted. Some folks use MA's to help create the visual effect but I like simple support and resistance to help guide some of my decision making.

What I am going to present here in this post is nothing new, nothing magic, nothing proprietary, does not only apply to range charts but also applies to any time based chart on any time frame, and this is for sure NOT a secret

An up trend:

An up trend is nothing more than a series of higher highs and higher lows. So we simply wrap some rules around this and say that an up trend begins when a previous resistance area has been broken.

A down trend:

A down trend is simply the opposite of an up trend; a series of lower highs and lower lows. So a down trend begins when a previous support level has been broken.

This can be demonstrated with the image below:


Now some will say well this is all well and good in a drawing but how does it apply to real life. Well behold a real live chart to show exactly what I am talking about.


I will post more when I get some time but this should help generate some thoughts.

Cheers!

Nice post Trader_V. I didn't get a trade today... the EURUSD looked so close to setting up but by the time it got to like 15:45 I lost interest as it was so late in the day particularly considering it is Friday and the markets have lacked follow trough of late.

Looks like I missed a nice little move... but c'est la vie! Next week is a brand new week!

Right on brother that's just the way it goes. As they say it is better to wish you were in a good trade than to wish you were out of a bad one

With the US being in turmoil with budgets and such the markets are a little less convincing. So in times like these I tend to take profit much quicker than usual.

Usd/CHF... That's a bottom with a breakout(almost) daily chart. Haven't looked at the pair in a while. But sure does look prime for a run

Hi MMaker,

thank you for your sharing. I agree that rangebars gives a better visual on the price action movement which give TA a more defined application. I will spend more screen time understanding it. It's like there is 1 range bar to a 4x H1 bars when the range is set at 20pips (yesterday's EJ session). So one can be staring at the 1 rangebar bouncing up and down for 4 hours and nothing happens.

One of the downside on brokers platform is that there are no true volume on each candle. If there are such information, one can really understand if a particular bar is under tremendous consolidation or distribution.

Have a great weekend!

TraderInc

Hi Trader_V,

thanks for the detailed explanation. I have attached EJ chart for analysis and hopefully you can shed some light to my visuals.

1. For sideways movement, (my range pips are 20), it is good for scalping but the uncertainty looms as to when to take those up and down trades.
2. What are the indications to take a trade should either on the S&R levels be broken? If trading breakout, I feel like it is taking a gamble.
3. How to ledge on the V turns which can give substantial pips returns?

Thank you and have a restful weekend.

HI MMaker,

thank you for your general sharing, before moving on, I would first like to declare that I am currently following a thread called "Simple Trading Method" by Big E.

They used a modified indicator called TDI, TMS etc with HA candles (created by Deam Malone). I see that they have much success and I traded using the method and it gave me a pretty decent return as well. As I followed the thread, I tried to incorporate the TDI indicator into the RB as I "assume" that RB charts is a better reflection of price with the indicator. I have yet to trade it with this combination as I am still in the observation stage. It would be "ideal" to turn the trades similar to the ones (below link) using RB.

http://www.forexfactory.com/showthre...05#post7020105

MMaker, thank you for the suggestion on using some indicators to identify the turning points. I can see the benefits of using RB10 with oscillators, one can better get a feel of price making next move after a consolidation period. I will incorporate your suggestions to try them out. Below is the RB20 with TDI indicator for further discussion and experiential feedback from your kind self, Nexus and VTrader.

As can be seen that I have marked out the blue vertical lines to indicate entries. There are many pips to catch for sure and I certainly know that the stop loss is at 20 pips.

Hi TraderInc,

I am going to get to your other questions here in the next post to hopefully give you some ideas to work with. But first I want to address a dangerous path that many many many new traders go down, and that is trying to catch every big move that comes along.

Get it out of your head now! Or you will head down a path that leads to to tweaking a system to death trying to catch every move that occurs. Understand and internalize this statement "Take the trades that your system has identified and manage them accordingly. Forget about everything else."

You cannot account for every move that the market is going to make. You have to have the patience to wait for the move, the discipline to act upon it when it occurs and manage it when you pull the trigger and the desire to continue trading the same way after you have had some losing trades.

Yes you will miss some trades that could have gone on to make some nice profit. But who cares!? As long as you are profitable trading your method that is all that matters.

Stop concerning yourself with this stuff...


Trade what your method shows you...

OK I am going to make a separate post for each of your questions. Just to keep things a little organized. And before I continue, I want you to understand that if I stress a point it's not me trying to talk down to you or anyone for that matter it's just me trying to get a point across. Everyone deserves a certain amount of respect until they don't I respect everyone's opinion. Just because I look at things one way does not make my way the only way. Hell that's what makes up the markets is the fact that there are some traders who think the market is going one way while others are setting up for a trade going the other way. Basic human psychology except for the computer involvement lol. While I provide you my views and opinions here you would be best served to take from it what you can and find your own way for seeing what is really there on the charts.

Ok so on to trying to provide an answer to your questions:

This is a great question and it is logically the next step in identifying when the market is not trending. The rhythm of the market is fairly simple. It moves from point A to point B, ranges for a bit then makes another move and this process repeats. I don't use 20 pip range bars but I rather use 6 pip range bars. 20 pip range bars are similar to 1HR bars on the EUR/JPY and the 6 pip Range bars are similar to the M5 bars on the EUR/JPY. Because I trade intra day and look for small moves this is what works for me. But it doesn't matter what size you use. It all comes down to comfort, risk management, and time available to trade.

We have already provided an example for determining if the market is in an up trend or down trend. And we did this using price action. You can however use whatever you like to determine what direction to trade. For instance only take long trades above the daily open and short trades below the daily open. You could use a moving average to decide. It doesn't matter! What does matter is that you have a way to decide what direction you are going to trade and only take trades in that direction.

One other very important thing I want to note. If you are using an indicator for determining the trend (MACD, 2 MA's etc) all that goes out the window when the market begins to consolidate. So any indicator you use should be ignored until a trend emerges.

So now what I do is I use a series of bars to tell me if the market is in a range or not. And once I have 2 bars moving in the same direction outside of that range then I have a trend direction. My criteria is pretty simple. 4 bars trading within the high and low points set by 2 bars establishes a range. Once I have 2 additional bars trading in this bracket (total of 4 bars) I wait for a breakout of 2 bars moving in the same direction to establish the new trend and trade accordingly. I adjusted my charts to show 20 pip range bars to help accommodate your style. See the image below for the example.



Now to address the second part of your question. When to take a trade within a range.

Because I do not take the initial breakout it allows me to catch a scalp in the opposite direction when I false breakout occurs. The rules for this kind of thing are also simple. In order to take a trade whether I am catching a continuation with the trend, or a reversal from a false breakout of a range I need room for price to move. So if my trigger bar is closing near a S/R area I will pass on the trade. But if I have at least 5 pips of from the close of the trigger bar to the S/R area I can scalp 4 of those pips for profit.

When a range occurs I cut the range in half with a horizontal line. If a bar closes back inside this range from the top down it has to close above my center line. And if a bar is coming from below it has to close below my center line. I can then take the trade knowing that there is room to move into profit before hitting the opposite side of the range. I have used the same range to show this example.

You will notice that I don't go cherry picking my examples. While I like to use the best possible exhibits for demonstration purposes if you scan your charts you will see these things happen over and over again.

Hi Trader_V,

Firstly, I deeply appreciate your time in reading my post and making the effort to guide a learning trader like myself. Thank you for the "loud-hailer" warning on the dangerous path that I may possibly take. I can understand the good that you are trying to bring across to me. I sincerely appreciate your strong advice. So much have been written on discipline in following a system and being human, we tend to sway from the path once in a while and that moment of swaying leads to doomsday. I will get your message posted in front of my trading desk. A good stark reminder!

I will take heart to your sharing and go through more thoroughly on the method which you have explained using my chart. The way you have explained and put across does look simple. I guess the only failure is self-sabotage in irrational trading going after every pips. Thank you for your guidance. I hope to be learning more from you and other seasoned traders here using RB.

Aside to Nexas, from the past threads that you have created I know you have been trying to get a thread purely on RB and midway-there are always "hijackers" to rob the thread of non-related topics. I hope, we can continue to share generously, exchange quality ideas and encourage each other in this thread. Posting of post-mortem charts will be a good learning platform for all to learn and share. I know there are not many RB discussion to be found in the web, so this could be one informative one.

As for my own belief, I always support synergy in traders genuine communication and friendship. Trading as a group or team makes it more meaningful, powerful and successful. In this world that we live in, we are framed to be competitive, but that can only limit resources and retard growth. It's like, I am living the opposite of the globe and we have different timezones, we can be providing information for each party to work on for the trades. Or even prompting one another on major events that can affect trading probabilities. By pooling resources, I believe, the trading distance can be further reached. We may not have "inside" information like the institutions have, but as minorities, we have our own strength.

Just my personal thought.

TraderInc

Have a great trading week ahead.