Opening Range Breakout , Crabel method

Quote from Gyles:

What about basing breakouts off of the previous close instead of the open?
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There is always continuity from one day to the next.

If you wish, look at the opens for this week on the thread "....where the rubber meets the road...."

Glance at the first trade for each day by reading the early posts or by reading the "carryover" comments at the end of a day which suggest what to do the next open.

It is a matter of NOT using probability based CW but instead using the certainty of non probabilistic information theory.
 
i can appreciate the whole system backtesting camp but it's just another form of searching for the holy grail in my opinion.

as a human discretionary trader, the limitless creativity and power of the mind gives me an edge that stands the test of time and the changing market conditions. i never have to backtest anything and i easily determine the profitability of my trading by simply looking at my account balance. i am not concerned with how effective a static pattern was in the past. in reality, it means nothing because every moment is different. patterns just tell you to start paying attention. i don't care for any nonsense indicators either. having said all that, the opening range and many variations that i discovered are part of my playbook and they work because i know how to trade. the patterns don't make money, decisions make money.
 
Quote from optioncoach:

I would like to add to the mix too.

One opening range breakout I have been testing after reading Kathy Lien's book on Forex trading is bracketing the first 5 hours of hte London market opening for trading of the Euro and Pound from midnight to 5:00 AM EST. When the market is in a tight range (I am using the Euro futures and GBP futures) those first 4 or 5 hours of the day, a breakout of that range using 60 minute bars most often leads to a continuation of at least 40 to 50 pips in that direction leading through the U.S. open at 9:00 AM EST or so. SOmetimes the breakout happens around 3:00 AM if at all.

You place a stop on the other side of the range for reversal and false breakouts. I am still testing but this is a great visual pattern one can trade using the forex futures and trading off the ranges establushed in the opening hours of the London markets.

For a good example, look at British Pound futures BPu06 yesterdya morning from Midnight to 3:00 AM EST...
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I am thinking to start forex trading as well, this is a great info, thanks
 
Quote from trader_mk:

i am not concerned with how effective a static pattern was in the past. in reality, it means nothing because every moment is different.
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I understand where you're coming from, but would you trade a pattern that had a success rate of 10% in the past?

Backtesting is used for hypothesis rejection. It is not used to find a system that will tell you how and when to trade. Many think backtesting can be used to find a trading system. It cannot do that. It just helps to reject systems but this is already a too valuable step you may be missing.
 
Quote from intradaybill:

I understand where you're coming from, but would you trade a pattern that had a success rate of 10% in the past?

Backtesting is used for hypothesis rejection. It is not used to find a system that will tell you how and when to trade. Many think backtesting can be used to find a trading system. It cannot do that. It just helps to reject systems but this is already a too valuable step you may be missing.
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Thanks for your reply. I understand what you're saying. I am not telling anyone not to utilize backtesting in a way that provides value for them especially if it extrapolates an edge or confirms a false positive as you stated. I have never used nor needed it to trade profitably as I absolutely love the freedom of discretionary trading around simple market ideas, practically dumb ideas, relative to many of you non-institutional closet quants. I don't need to backtest for positive or negative value because my account balance will let me know automatically and it never lies.

I trade the same 'setups' differently from one occurrence to the next. It all depends on the circumstances and adapting to it in real-time because every moment is different. If you know how to trade, 'setups' just serve as yellow lights. You either slow down or speed up. Simplicity is an acquired taste.

Again, I am not concerned with a pattern's historical results because an idea's validity or lack thereof in the past has no bearing on the future. Blame it on reality. With that being said, believe whatever serves you well in reality. I am just sharing my beliefs because it serves me well.
 
Quote from intradaybill:

I understand where you're coming from, but would you trade a pattern that had a success rate of 10% in the past?

Backtesting is used for hypothesis rejection. It is not used to find a system that will tell you how and when to trade. Many think backtesting can be used to find a trading system. It cannot do that. It just helps to reject systems but this is already a too valuable step you may be missing.
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Are you serious? Backtesting CAN be and is being used to find a trading system. If you cannot use the mechanical signals then the idea really is of no use.
As for ORB, it sounded like a really great idea but testing it revealed that it just does not work, not for the main indices anyway.
 
Quote from d08:

Are you serious? Backtesting CAN be and is being used to find a trading system. If you cannot use the mechanical signals then the idea really is of no use.
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No, you are mistaken. Backtesting is not used to find trading systems. It is used to reject trading systems. If you do not understand the difference you are in great danger. If you were told otherwise and you paid money for the advice, you should ask your money back.

Only your mind can find a trading system. Backtesting may or may nor reject it. If it is not rejected, it may or may not make money. If it does not make money, you should blame your mind, not backtesting.

This is the story.
 
Quote from intradaybill:

No, you are mistaken. Backtesting is not used to find trading systems. It is used to reject trading systems. If you do not understand the difference you are in great danger. If you were told otherwise and you paid money for the advice, you should ask your money back.

Only your mind can find a trading system. Backtesting may or may nor reject it. If it is not rejected, it may or may not make money. If it does not make money, you should blame your mind, not backtesting.

This is the story.
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Alright, what you initially wanted to say was "backtesting is used to test a hypothesis", naturally that is true. I wasn't in for a philosophical discussion so you got me off-guard there.
 
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