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Preview: Comments on TraderFeed: Six Signs of a Range Bound Market

Comments on TraderFeed: Six Signs of a Range Bound Market





Updated: 2016-08-14T03:34:09.589-05:00

 



I think range bound markets are the most difficult...

2008-10-17T01:17:00.000-05:00

I think range bound markets are the most difficult to day trade.

There are a lot of chances to get whipsawed often if stops are misjudged,however one good thing about the ranges can be the way stops can be put with some degree of certainty (some points below support for longs and some points above resistance for shorts).

Profits do reduce due to low volume,prices move very very slowly,profits need to be taken at first sign of a favourable trade.

Just my 2 cents.

Cheers,
AVP
http://avp-blogs.blogspot.com



#4 was a big clue to me yesterday. I think I watch...

2008-05-09T08:15:00.000-05:00

#4 was a big clue to me yesterday. I think I watched the A/D line flip from positive to negative and back to positive all within the first hour. Then I IM'ed a friend of mine that it was looking like we were in for a chopfest.



Brett,I found a different approach to the problem ...

2008-05-09T07:08:00.000-05:00

Brett,

I found a different approach to the problem of small range days. I try to go to the market, where my system works best.

By following multiple markets usually you will find one suited to your trading style. It's difficult to learn the patterns of not only one but multiple markets, but it pays of on days like yesterday.
As a US trader you might first take a look at the European indexes and how they moved while you were sleeping. What moves do you see in the EuroStoxx50, in the DAX and in the FTSE futures. If you notice small ranges in these markets and there is nothing important on the newsfront, then expect further consolidation at least until lunchtime. If Europe was volatile, then you can expect that volatility to continue. It's just a rule of thumb, but you need something to start the day with. (I do the same in the morning by looking at the SPI, the NIKKEI and the HSI)

Now if you are a trend trader and you can expect a small range day looking at the way Europe traded so far, then you might switch to currencies (Euro/USD), to Gold or to Oil trading. These markets move only losely correlated to one another, so one of these might show the volatility and range you need for your system to work.

But even if you limit yourself to equity indexes, it pays off to follow different markets. Index is not index and even if you can expect all equity index markets to be highly correlated, there are differences and on small range days you can exploit these without increasing your risk profile.

The German DAX usually moves 5 to 10 points when the ES moves 2 to 3. The british FTSE moves even more and has the advantage of a smaller tickvalue (DAX minimumtick is 0.5 with a value of 12.5 Euro or 19.25$. The FTSE also has a minimumtick of 0.5, but the tickvalue is 5 british Pound or 9.75$ and the margin necessary is considerably lower).

Chris