Trading schemes

Hello everyone,

I am still wet behind the ears so please forgive the questions

My interpretation of schooling is we can trade

  1. Trends and or

  2. Ranges.

I have started trading trends using long term ema, MACD and RSIs.

What I am struggling and need some help with is trading ranges because ranges are more common I understand.

If I trade a cross e.g. EUR/CHF and use a bolly band to check a breakout is this how we profit? If not how do we work a range?

Please help…

Your correct, there are 2 types of market “schemes” trending and ranging. How you trade each will be competely different. Just like a dune buggy for baja races and a f-1 car for monte carlo are both cars but both best suited for their environments. My only tip is that you have 2 oscillators, MACD and RSI. They are both using the same information so they are redundant, also since they calculate differently your going to get more confusing signals. inducing more lag than necessary.

For ranging environments its good to establish the high and low bounds(support/resistance) which are containing the price movement. taking bounces off of these main S/R and looking for confirmation on your oscillator is probably a good start. Now I am customizing this to your particular set up. But usually your walking into the ranging situation with 2 ideas 1) sell tests to the resistance/buy tests to the support 2) get into a breakout trade into a new trend. in trending markets oscillators don’t do that well, as they will tend to skew results usually leaving a lot of overbought in uptrend and oversold in down trends. But in ranging markets oscillators really shine.

UPDATE:

I traded the EUR/CHF on a 15 minute chart to catch the trend within the range?!

So caught it at the bottom with a long so hoping to get out at the top within a similar time frame- am I making sense?!?

Trading has nothing to do with hope, just saying.

Thank you.

I am beginning to think that using a short term time frame (15 mins), and just using a bolly band I can probably just trade support and resistance without using indicators??!

so if price is at the bottom of the band, do a long and vice versa on the basis that it will go back to the band?!

I know that some are making it work, but I would be wary of EUR/CHF at the moment - the Swiss National Bank put a floor under the value of CHF v EUR a few months ago (a glance at the chart will show you exactly when!) but as there is no reason for EUR to rise against CHF that means that it has been stalled (at around 1.2, I think, although that is from memory so don’t quote me!), so this is not a conventional range, it is a false stall caused by the SNB intervention. So by all means trade it, but be aware that it is a falsely created range and is, for the most part, unusually tight. Personally I have not touched EUR/CHF since the intervention as I just don’t like the feel of it.

Anyway, apologies, am conscious that this is an unsolicited aside, but thought you might like to look into the SNB intervention if you want to trade EUR/CHF.

ST

Here is an example, using price action, volume and a MACD. I chose this time because we were in a range for several days, so it is cherry picked but still from fairly recent data. From June 7 to june 14th on USD/JPY. I think this illustrates quite well how to trade in a range, also you can see the several bar lag between the PA/vol studies and the MACD indicator. This means price had to already move in that direction before you got a signal, decreasing your profit margins. But as you can see here in this example of ranging we were on average 3-4 bars late. If you look at the buy from the support you can see how 3 bars of lateness could mean you miss a lot of the move.

There is no need to apologise the very fact that you took the effort to teach me something is appreciated.

Good job I am only tradin demo!!

I really only traded that to improve myself on range trading. What other pairs do you feel are good pairs to range trade?

And is my approach sensible- in that with range trading I am using short time frames (1 hours) with a bolly band to catch the S and R, I am not using any indicators because they will create lag here.

Or am I being thick as usual?

Lol thank you. Can I start by saying that nothing you have said suggests that you are ‘being thick’. If someone learning a new skill blunders in without asking any questions, then I think that they are making a mistake. Asking questions is never thick.

I should say up front that I don’t use Bollinger Bands myself, I know that many do but I just prefer the chart a little more uncluttered - both work, so I am not knocking, but my thoughts might not always suit a chart using Bollinger.

I simply draw my S&R levels on manually, I find that decent levels will leap out, so if a level does not leap out at me then I’m probably guilty of forcing it, so I will move on to another Pair.

To answer your question, any Pair can range, but personally I find that the cross Pairs give me more setups. Ranges can work on any timeframe, so personally I see nothing wrong with you looking to trade them on the Hourly. You might get stronger levels trading the extremes of ranges on a higher timeframe, but you will get more setups trading on the Hourly, so both can work well as long as you have proper money management in place. You might have more losing trades on the lower timeframes, so you need to preserve sufficient capital to make the winners (and you should have more of those, too!) count and leave you nicely ahead when the dust settles.

As any Pair can throw up a decent range, examples are tough, but here are a couple: GBP/CAD Daily chart: scrunch it up to show back to late 2010, then throw a level on there at around 1.6392. You can see that shorting out of there has been giving good results. If we hit that level again, I will be looking for short setups. You could say that we are in a long term range with the (admittedly rougher) bottom level somewhere around 1.5475. Similarly, pull up GBP/NZD Daily chart, back to around last Summer. I have been shorting out of around 2.1000, with the floor of the range somewhere around 1.9000 or less (I have only been shorting the range as I did not like the bottom).

Some lower timeframe stuff: AUD/JPY 240 chart, two levels at around 79.70 and 82.10. It’s a little rougher, but Support became Resistance at around the 79.70 level around the 7th-14th June, now we’re pretty rangy. Or the EUR/GBP Hourly chart, from 13th-19th July. I didn’t trade it, but levels of 0.7878 and 0.7826 show a 50 pip range/consolidation that opened with Support becoming Resistance, then a range, then a breakout to the short side.

Those are just some rough examples, I only traded the first two, but it gives you one take on it. I am sure that others with pile in with differing views.

ST

oh wow so much to learn!!

I have only been doing this for 10 days…

Lol I’m in my third year and still learning - but it’s worth persevering!

are you full time now then?