When price is in a range why do some people buy at the top? lol

volpri said:
Glad to be of some help. When you look at the odds favor shorting near top of a range and going long near the bottom. I mean like 70% to 80% of BO’s will fail! That is good odds for fading. So fading the BO’s is a viable strategy. Of course, sooner or later a BO will succeed and if one happens to be in a fading position when it does succeed then one has to exit and look at going in the opposite direction of the fade.

Another technique that can be profitable in BROAD ranges. One can consider averaging into a losing position. I call it scaling into a losing position. Why do this? Well, If a trader got in too early say long in the lower 1/3 of a range and it heads south the odds favor a bounce off the bottom of the range and even if it breaks thru the bottom and becomes a BO ...WELL remember most BO’s fail. So, if the trader has been adding to his losing position the odds favor he will soon be back at a profit. Test it out on a LIVE SIM. Any scaling in must carry a limit on the max loss one will allow before exiting because when the technique does fail, losses can get big if not controlled.
More...
Thanks and good conversation

Here is an example of range I was looking at today and traded. You can see me in short trade at the top of the range. The purple is the resistance zone and orange is the support. I wait til a range is somewhat clearly defined. I wait til top of resistance is tested in the zone, if it does not breakout, I short it.

One question is how do you decide your profit targets?

I use OCO bracket orders and I have just been using R:R =1 to get in and out. Or I identify some minor support within the range to get out.

One thing I am considering is using 2 contracts, and exit 1 contract at R:R = 1 or some minor support, and let the other contract run and just management.

For example, for the short the example. I will exit 1 contract at that profit target and manage the other contract for bigger profits.

So for this case, if I get stop out. Good, atleast I know price is going in opposite direction, and I just fade the BO.

The challenging part is identifying the range. But that is just practice.


upload_2018-1-26_22-29-27.png



upload_2018-1-26_22-39-0.png
 
Thanks volpri. good points



volpri said:
Too many traders see a 2 point profit in the ES and they will not take it. Waiting for that 8 point ride. Before they can grab a candy bar that 2 point profit disappeared and now they are suddeningly looking at a 2 point loss and the candy bar is melting in their hand as the loss can be substantial if one is trading 10 or 20 lots.
More...

lol, I have been here with ES many many times trying to trade one contract looking for the big 10 points days and I am seeing PnL with +$200 or 4 points. Trading 2 contracts, I can exit for the small points, breakeven and let the other contract run and just manage the trade. This is when I realize trading 1 contract is very hard.
 
propwarrior said:
If price has been in a range for sometime why do some people insist on buying when the price is well above the average price of that range? It's just a really dumb thing to do. When these people go shopping do they actively seek out overpriced items to buy and ignore the cheaply priced items. :D
More...

I read the other day that the stock market has made 75 new highs since Trump was elected so what is wrong with jumping on board a good growing stock to ride for the future. As high as this market is now it may still run for 2 or 3 more years. If you want a position, getting in at the exact most opportune time is very difficult.
 
Illini Trader said:
so what is wrong with jumping on board a good growing stock to ride for the future. As high as this market is now it may still run for 2 or 3 more years.
More...
And as your friendly stockbroker might say,
"This could be your last chance to buy at these prices!!"
 
Last edited:
Illini Trader said:
I read the other day that the stock market has made 75 new highs since Trump was elected so what is wrong with jumping on board a good growing stock to ride for the future. As high as this market is now it may still run for 2 or 3 more years. If you want a position, getting in at the exact most opportune time is very difficult.
More...
You may be late to the party sir if you are not in the market already.
 
You must log in or register to reply here.
Back
Top