Why chase the trend instead of the range? | Forex Factory

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Why chase the trend instead of the range?

  • #1
  • First Post: Apr 14, 2014 5:52pm Apr 14, 2014 5:52pm
Hello traders, I have a few questions that i've been thinking of after watching some charts that I want to ask you guys. Ok, since it is commonly known that the market ranges more than it trends then why chasing the trend ? Instead of the trend, isn't the range supposed to be our friend ?
So if you are a trend/range trader, why do you think that one is better than the other. Thanks.
  • #2
  • Edited Apr 15, 2014 7:22am Apr 14, 2014 6:58pm | Edited Apr 15, 2014 7:22am
Hi, You're kind of mixing it up a bit. It's all good!!! Oh and forget about the word chasing. So, the trend is your friend. Let's say you're an intraday trader. You find a time frame that gives you the big picture like 4 hour on up for example and then you look for entries in the same direction of the big picture overall trend. You find entries as price pullbacks, retraces, etc etc. Going in the direction of the overall trend increases your probability for success even if you botch your entry. Provided you give it room to breath when using stops that is. Anyway, you find trending and ranging together. For instance, an instrument can head north or south bouncing perfectly off of a top and bottom trendline. AKA The Price Channel. These IMO are the money makers because possible entries and exits are better defined. Also there are mini trends inside the price channel . Not always but for the most part I only look for instruments that are clearly ranging/channeling. If an instrument is not ranging/channeling, I look for another. If I can't find it in a particular market (FX), I'll look for it in another market (Stocks or Commodities) but that never happens. You can always find what you want in any market. You just have to mess around with the charts and put the puzzle together.

USDJPY currently ranging/channeling (Blue lines). Price is at the bottom of a slightly trending upward price channel. Looks like she could be heading North this week. If she doesn't drop off the line that is. Then it will be a bit messy. It has already started the move today. If I were to trade this, this week, I might be looking for long signals until the picture I'm looking at shows me different. Falling off the line I might consider selling but experience will have me looking for retracement plays back to the line. Right now the Green line is creating a bit of resistance. Gotz to keep watching her for an opportunity and then attack like a Lion.

K.I.S.S. for everything in life!!!!!!

Let's trade em up Kidz.... Let's break the big banks... (-; Let's go underground with..... The Secret Retail Trading Alliance... Who's in !?!
T.S.R.T.A. in full effect...

I'm losin' it.... (-;

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Quoting metta87
Hello traders, I have a few questions that i've been thinking of after watching some charts that I want to ask you guys. Ok, since it is commonly known that the market ranges more than it trends then why chasing the trend ? Instead of the trend, isn't the range supposed to be our friend ? So if you are a trend/range trader, why do you think that one is better than the other. Thanks.
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  • #3
  • Apr 14, 2014 7:20pm Apr 14, 2014 7:20pm
Quoting JoeNY
Hi, You're kind of mixing it up a bit. The trend is your friend. Let's say you're an intraday trader. You find a time frame that gives you the big picture like 4 hour on up for example and then you look for entries in the same direction of the big picture overall trend. You find entries as price pullbacks, retraces, etc etc. Going in the direction of the overall trend increases your probability for success even if you botch your entry. Provided you give it room to breath when using stops. You find trending and ranging together. For instance, an...
  • #4
  • Apr 14, 2014 8:06pm Apr 14, 2014 8:06pm
Using the charts that JoeNY kindly provides, trend and range can be traded successfully. In fact markets only trend about 25% of the time anyway.

Happy Trading!
  • #5
  • Edited Apr 15, 2014 7:27am Apr 14, 2014 10:05pm | Edited Apr 15, 2014 7:27am
The question is like a loaded gun, because a trend is just a few time frames away. You are always in some kind of trend, you might be trading a 5 minute chart and selling in a 4 hour down trend, or buying on the 1 hour in a weekly up trend. Obviously i picked time frames that barely conflict from being so far apart but I hope you get the idea. The Trend is your friend, so the best advice I can give is to try to follow the money movement. Is it high 40 low 20, high 35 low 25, high 30, Low 30. That might be a signal that the trend is changing, the next move should be a high 20 and a low 40 and the bears have now taken over. Think of the market as a living entity that gets smacked around, there will come a point where it is consistently being slapped weaker or harder in one direction, and that would be a safe market entry. Hope that clarifies a few things.
Being a trader is lonely, but being a great trader is lonelier still
  • #6
  • Edited Apr 15, 2014 12:03am Apr 14, 2014 11:39pm | Edited Apr 15, 2014 12:03am
Quoting JoeNY
USDJPY currently ranging/channeling (Blue lines). Price is at the bottom of a slightly trending upward price channel. Looks like she could be heading North this week. If she doesn't drop off the line that is. Then it will be a bit messy. It has already started the move today. If I were to trade this, this week, I might be looking for long signals until the picture I'm looking at shows me different. Right now the Green line is creating a bit of resistance. Gotz to keep watching her for an opportunity and then attack like a Lion. K.I.S.S. for everything...

Thanks JoeNYfor the post. we can see that the Green dotted line mentioned by JoeyNY is actually the price movement created by the bigger timeframe (the weekly channel) (solid green line) ?
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an attempt of compounding, from USD50+25bonus until ....burnout..haha
  • #7
  • Apr 14, 2014 11:47pm Apr 14, 2014 11:47pm
I am a range trader, so I can respond to your question. I don't trade 4Hr ranges though, like a previous poster referenced. In order to know the general direction of the market I use two tools. One, I place a moving average on top of my indicators that allows me to see trend exit points. This way, I can trade ranges when the market is ranging, and see the trend exits when the market is trending. For instance, if you use a CCI set to 14, then find the highs and lows of your time period and experiment with a moving average that the CCI will cross after the high or low is reached. Usually it is a factor of the period setting. So, if you use 14, then sample SMAs of 7, 14, 28, 42. When you find the MA that provides the most consistency, then remove it from your chart. Add the Bollinger band that matches your choice. Then attach the MA again with a different color. You should find happiness

The second tool I use is multi time frame PSARs. These are generally used as stop loss points for most people, so apparently if they switch sides then the market has switched direction too, right? Of course there are head fakes, so just rely on probability. If I trade a 5M chart and have a 30M Psar on it, then I can see how the 30M chart is reacting. While I have no idea what indicators you use, or their settings, the PSAR I use is Step 0.1 and Maximum 1.0. Attached is a PSAR that has already been interfaced to mt4 build 625, so it should work for you.

Of course you can also paralyze yourself by looking at multiple charts. Nothing ever lines up, so good luck making any money doing that.

Anyway, range trading means you have lower time period settings on your indicators so you can more quickly react to directional changes. If you use these higher time period tools you can keep track of where you are.
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File Type: mq4 #MTF_PSar.mq4   3 KB | 619 downloads
You cannot be extraordinary by being normal
  • #8
  • Apr 15, 2014 12:04am Apr 15, 2014 12:04am
because I want price to have a direction and I want pips
  • #9
  • Apr 15, 2014 2:47am Apr 15, 2014 2:47am
Depends on your trading style. If you are a range trade then your should "chase" the range, but your system will suck on trending markets. The reason why many traders "chase" the trend is because it much easier to trade with.
  • #10
  • Apr 15, 2014 2:54am Apr 15, 2014 2:54am
Remember, not everyone is looking to get in at A and out at B.

Most of the successful funds are looking to get in at A,B,C,D,E,F,G and then out.

Retail traders never even consider that, they can't wait to exit a trade, the reason most fail, the reason most on FF don't trend trade, the reason most think 3/1 RR is high.

The trend is only your friend if you participate in them for enough time.
tradewith60
  • #11
  • Apr 15, 2014 5:59pm Apr 15, 2014 5:59pm
Quoting dkrock
I am a range trader, so I can respond to your question. I don't trade 4Hr ranges though, like a previous poster referenced. In order to know the general direction of the market I use two tools. One, I place a moving average on top of my indicators that allows me to see trend exit points. This way, I can trade ranges when the market is ranging, and see the trend exits when the market is trending. For instance, if you use a CCI set to 14, then find the highs and lows of your time period and experiment with a moving average that the CCI will cross...
Many thanks. Simple and enlightening!
  • #12
  • Apr 15, 2014 6:34pm Apr 15, 2014 6:34pm
Quoting JoeNY
Hi, You're kind of mixing it up a bit. It's all good!!! Oh and forget about the word chasing. So, the trend is your friend. Let's say..... {image} {quote}
Let's zoom in today from the Daily I posted previously into the 60 minute and observe the Bulls Bears battle up close. Well look at that... Up close the same lines form a Channel in 60 minute view. But this channel (wedge) is heading for a squeezzzzzzze..... Hmmmmmmmmmmmmmmmmmmmmmmmmmm...... $$$$$$$$



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  • #13
  • Apr 15, 2014 6:49pm Apr 15, 2014 6:49pm
T.S.R.T.A. in full effect... DKRock for President..

Quoting dkrock
{quote} Spoken like a true "broke" buy and hold taught trader, or I mean salesman No offense, but .............
SPC * Swollen PocketZ Crew!
  • #14
  • Apr 15, 2014 7:00pm Apr 15, 2014 7:00pm
Quoting dkrock
Once again the difference between a theorist salesman and a Forex trader. Don't let these guys lower your expectations!! You have to learn to ignore salesmen and gurus and eventually you will figure out what works
Good talk and wise words!
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #15
  • Apr 15, 2014 10:48pm Apr 15, 2014 10:48pm
It was a complement to your post. The second to last line in my post, post #2 has to do with your feelings toward big money funds....

T.S.R.T.A

Quoting dkrock
{quote} Sorry, but I have no idea what you are talking about. Here is the other obvious thing I forgot to mention. No one even knows they are in a trend until the trend is well on its way. In other words, one looks at historical charts and says, hey, there is a trend. Suddenly you are buying dips and doing trades A, B, C, D, etc. Really? You have a time machine and can go back in time and place trades at point A, B, C, D, etc? Amazing!! If you find yourself in a stair step pattern and one currency shows more strength than the other, you might be...
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  • #16
  • Edited 11:09pm Apr 15, 2014 10:57pm | Edited 11:09pm
Quoting JoeNY
{quote} Let's zoom in today from the Daily I posted previously into the 60 minute and observe the Bulls Bears battle up close. Well look at that... Up close the same lines form a Channel in 60 minute view. But this channel (wedge) is heading for a squeezzzzzzze..... Hmmmmmmmmmmmmmmmmmmmmmmmmmm...... $$$$$$$$ {image}
Price Action RULEZ! PA is the holy grail..... Since the 1800's ... Thank you Homma Munehisa

Scale in an out.... Always take those profits....

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  • #17
  • Apr 16, 2014 12:08am Apr 16, 2014 12:08am
Quoting dkrock
I am a range trader, so I can respond to your question. I don't trade 4Hr ranges though, like a previous poster referenced. In order to know the general direction of the market I use two tools. One, I place a moving average on top of my indicators that allows me to see trend exit points. This way, I can trade ranges when the market is ranging, and see the trend exits when the market is trending. For instance, if you use a CCI set to 14, then find the highs and lows of your time period and experiment with a moving average that the CCI will cross...

interesting comments, would you be so kind to attach a screenshot of what you have mentioned, range is more like uncharted lands for me, and these days market is forcing me to learn how to trade it
In the end its just a stupid numbers game
  • #18
  • Apr 16, 2014 4:06am Apr 16, 2014 4:06am
Quoting dkrock
{quote} Spoken like a true "broke" buy and hold taught trader, or I mean salesman No offense, but ridiculous strategy. In fact, it is the stock market strategy. It is the strategy the "firms" that try to hire me want me to believe in, LOL. Do you even trade Forex?? Stock market strategies do not work in Forex. You will get your ass handed to you in a hurry. Forex trades at 133 times the stock market volume each day. Buy and hold versus range trading is the difference between making 7% per year, and 3000% per year. Fund strategy is predicting some...
I think you're confused, I never mentioned a buy and hold strategy, but thanks for your advice anyway.

Word of advice, you should use a less derogatory manner it doesn't reflect well on you.

Good luck with your strategy and lots of pips for you.
tradewith60
  • #19
  • Apr 16, 2014 5:19am Apr 16, 2014 5:19am
Quoting dkrock
It's all cool. Classically trained traders never seem to understand what I do or how. I should be used to contrarian remarks by now, but I am not. No, I am not going to give you a screenshot. While you most likely will not understand it, and I certainly am not going to explain it, there is the possibility that you might understand it, and that would be detrimental to my business. I have absolutely no desire to see my methods go viral and compete with millions of other traders for the same signals. I have already experienced marketers stealing my...
sure, I understand, anyway its the idea that matters to me best of luck to you
In the end its just a stupid numbers game
  • #20
  • Edited 8:30am Apr 16, 2014 6:04am | Edited 8:30am
This is what mystifies me. The holy grail is in front of your face but for some reason you want a system where you can wait for a line to crisscross or green light to flash to pull the trigger. Is it the decision making part that no one wants to deal with?.... It's fascinating. This is what psychologist really need to study and forget about the other crap they study when it comes to trading.

Take one pair. Draw some lines, constantly change those lines and make them constantly make sense and stare at that pair trading everyday for a year. After a year you won't care about another guys edge ....... But that is going to be some serious work. Lots of work... BORING WORK.... You cut out for it... No one can teach you that part. You have to become one with the pair. When the different institutions or people trading/manipulating that pair, (change personnel), move to another pair, close up shop or die, a new personality will take shape. If you're still one with the pair you will adapt with it. The code doesn't change overnight. The prosperous ones need to adjust as well. Us little guys will always be able to follow because PRICE IS PUBLIC. Those crumbs are huge for our little mouths....

Maybe it's because I'm as dumb as a box of rocks that I get. It's so easy a caveman can do it comes to mind...

I post this crap because it's in every trading book written before I was even born. It's in every book being written today and it's on every chart trading site that exist. Google the TradingView site and see 100's of members posting chart analysis and good no-nonsense analysis. It doesn't change the game. Millions of dollars of fresh money are entering the market everyday from a new crop of eager participants. Almost all will pay tuition. Almost all will drop out of school before getting their money back. Their money will stay in the pool with millions of fresh money everyday repeating the process. The pool will never be empty as long as we continue to procreate so ....

.... let's trade em up kidz and get dat paper.... well paper for now, digital money on the way...

and NO!!!!! I don't have an EA for this post.....

Quoting danzka
{quote} sure, I understand, anyway its the idea that matters to me best of luck to you
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