who trades with volatility breakouts?

bufferman · Jun 1, 2004

Just reading thru "Day trade futures online" by Larry Williams and he mentions "volatility breakouts" and "range trading."
From his writing, I can see this guy's into 100% mechanical trading although he takes his time in refining a system and that's always good.

Because the book is old, I would like to ask if people really use range in any way while daytrading futures. Whether it is the previous day's range or the average of last 10 days' range.
If so, would anyone like to share what to look for and which methods still work well.

thanks,
Paul

maxpi · Jun 1, 2004

If volatility falls way down and stays that way for awhile typically you will see a big move after awhile. Predicting which way is the hard part and if you can't predict the direction you will get stopped out in false moves in the wrong direction.

Max

bufferman · Jun 1, 2004

Excuse my ignorance, but which indicator is it exactly that you use to measure volatility?
Larry uses the term "volatility" but he's actually talking about range breakouts.

thanks.

bdixon619 · Jun 2, 2004

http://www.eis.pl/kr/AFM/e-st-Historical_Volatility_Daily.html

bufferman · Jun 2, 2004

thanks, that looks interesting.

maxpi · Jun 2, 2004

Quote from bufferman:

Excuse my ignorance, but which indicator is it exactly that you use to measure volatility?
Larry uses the term "volatility" but he's actually talking about range breakouts.

thanks.

I like Bollinger Bands, many use Average True Range.

Andy62279 · Jun 2, 2004

I use filters to reduce false breakouts

Trader2Be · Jun 2, 2004

Quote from Andy62279:

I use filters to reduce false breakouts

What filters do you use to reduce the false breakouts? How do you use them? I trade breakouts myself, and would love to reduce the false breakouts.

Thanks,

Cindy

Diamondtrim · Jun 3, 2004

Quote from Andy62279:

I use filters to reduce false breakouts

I do too. I have a filter set so that I look at stocks that are only trading at least 70% above normal as compared to what they usually trade when the breakout takes place. I helps me a great deal.

Andy62279 · Jun 3, 2004

Quote from sdcindy:

What filters do you use to reduce the false breakouts? How do you use them? I trade breakouts myself, and would love to reduce the false breakouts.

Thanks,

Cindy

I look at different time frame as a filter, and wait for close above/below my entry signal. I have found using different time frame has reduced my losses, but reduced profits as well. I have to be more patient, and overall it comes out ahead in the long run. As far as closes above/below... sometimes I enter at much more expensive price, but I have found this has reduced many false breakouts.

I don't know if this will help in the market you're in... but could be somethin to look into. Maybe you can make it better :-D

Andy