trading range AND breakout!

Well, I can't go there with you today. But

Here are some ideas for those who want to do some number crunching

1. Put some market bellweathers on your screen, looking for volume at the bid, or just volume in 1 min increments. If possible you would like to have a screen that tells you whether the volume you see every min is above (accelerating) or below (decelerating) the previous average (you decide the basis). Put in a couple of EMA's and you have an alert system for breakouts.

2. Put your market sectors on the screen and do the same only instead of volume you are looking at percentages on 1 min increments. I would put in a 5-7 period ema as an early warning system of sorts.

3. A proxy for the above is the $ADV (I think) which is the total of advancing volume (Esignal) on the NYSE. You could put in a couple of EMA's here (I would use the 5, 20 and 50 period) and look for the acceleration there to tip off a move out of the range.

Finally what most people fail to do is to keep track of the cash market. Since the cash sets a floor and ceiling to where the futures are going, you can get an advance warning on moves IF you can spot the telltales. On the cash the telltales are the spike moves up or down
 
Great post, Steve.
Quote from steve46:

Well, I can't go there with you today. But

Here are some ideas for those who want to do some number crunching

1. Put some market bellweathers on your screen, looking for volume at the bid, or just volume in 1 min increments. If possible you would like to have a screen that tells you whether the volume you see every min is above (accelerating) or below (decelerating) the previous average (you decide the basis). Put in a couple of EMA's and you have an alert system for breakouts.

2. Put your market sectors on the screen and do the same only instead of volume you are looking at percentages on 1 min increments. I would put in a 5-7 period ema as an early warning system of sorts.

3. A proxy for the above is the $ADV (I think) which is the total of advancing volume (Esignal) on the NYSE. You could put in a couple of EMA's here (I would use the 5, 20 and 50 period) and look for the acceleration there to tip off a move out of the range.

Finally what most people fail to do is to keep track of the cash market. Since the cash sets a floor and ceiling to where the futures are going, you can get an advance warning on moves IF you can spot the telltales. On the cash the telltales are the spike moves up or down
More...
 
I never watch the cash mkt. Why watch something that "MIGHT" be a leader or "MIGHT" be a laggerd? Just watch the instrument you are trading and let the arbs worry about the relationship.

Before i go any further i will clarify this by saying i am talking about the ES and nothing else.

Back to the question of the thread: "TRADING RANGE and Breakout.

My mystery there, i mean really, this subject is in every technical analysis book from Edwards & Magee on.

Here is a quick simmery how i do it ( when i do it ). First detect the range, then decide if it is tradable (subjective), with absolutely no bias about which side the breakout will occer (if indeed it even will), you place bracketed orders above/below the range boundraies. These limit orders are for catching the breakout. False breakouts are a seperate issue that every trader must deal with. Myself i have a plan for that also. OK, back to the question: Trading "WITHIN" a well defined range is just buying weakness towards the bottom of the range and selling strength towards the top of the range. .....Common sense tells you this is exactly what has been forming the range in the first place, CORRECT? OK, we got that cleared up, so the next thing you must tell yourself is simply: What will i do if i go long at the bottom of the range ( this is going against the thought process of buying weakness and selling strength as most think is the thing to do........YOU are not looking for BARGAINS in trading or investing, THERE IS NO SUCH THING, i do not give a dam what CNBC says, there is no such thing as a bargain. You are trading money, if you want a bargain go to a garage sale. OK, back to the subject........you have bought the bottom of the range and sure as shooting the bottom falls out as soon as you are filled. You have only 2 choices....either you bite the bullet and get out (which means it will surely be a flase breakout...LOL , or you do a SAR. The SAR is what i am honing now and have visions of NOT sugarplums but of more dough. :D

There is no mystery to doing ranges, it is a matter of making decisions fast and no hesitation. making a decision and sticking to the decision is what makes a trader money, indecision is what makes others money. YOUR MONEY!!!!!
 
Just so you know. This relates to some of my past comments about thinking clearly.

I don't suggest that the cash leads or lags. I suggest instead that the cash "sets a floor and a ceiling on how the futures move"

That is quite different from saying that the cash leads (or lags).

Thats all.

Dont change a thing on my behalf. You go right ahead with your plan. I am sure it is serving you just fine.

Steve
 
Quote from K-Rock:

The move at about 12:10 was a classic bear trap/continuation pattern. If I were still trying to achieve my goal for the day I might have been a victim; however, there were warning signs (divergence, etc...), but more importantly after it breached 1258 I would have surely reversed to the upside.
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This might be the continuation pennant you were talking about. I was trading the YM Friday but it was on the ES also.

4re
 

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Better yet...accomplish this without a commitment to direction, before the market tells you...


Quote from thunderinvalley:

how can you trade the trading range for bread & butter yet anticipate the breakout for the jetski?



:confused:
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Quote from 4re:

This might be the continuation pennant you were talking about. I was trading the YM Friday but it was on the ES also.

4re
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My bad, I was referring to the upward move at about 1210 EST.
 
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