Quote:
Originally Posted by dpaterso
Hi Charles, and thanks for the post and input (sorry - I know this is a terrible thing to say - but I'm glad I'm not the only one that had a bad week last week)!!!
You know - I also just had a thought about how to determine whether the market is trending or ranging:
Sometime back I posted a message which contained details of what I refer to as 'Akrams Alligator'. It's just three simple EMA's (or SMA's - can't remember) BUT when all three lines are intertwined it's a pretty good indication that the market is range bound (that's what Bill Williams' 'REAL' Alligator was designed to tell you - amongst other things). Anyway - 'Akrams Alligator' or Bill Williams' Alligator - react pretty fast (unfortuanately I have to agree with you that ADX does not react quickly enough - not on forex pairs anyway).
Again - like you - I've been looking at Bollinger Bands (as I mentioned earlier) but they just don't 'do it' for me.
The more I look at things - the more sure that I am - that using EMA's - for what we're trying to accomplish - are 'the things' to use.
I realise that you're trying to get our (get a) system to work in a range bound market but is it all that important (if it is then - just as a matter of interest - I'd like to know why you feel that way)? Statistically speaking - I know (am led to believe) that the markets only trend something like 20% or 30% of the time. However - and this is a 'BIG' however - that's on any one single instrument and on any one single timeframe. In other words - what I'm saying is this: if you have enough tradeable instruments (pairs) - SOMEWHERE on SOME TIMEFRAME on SOME INSTRUMENT (PAIR) there is a trend. See what I'm trying to say? If you are only going to 'stick with' one or two pairs and need to (or want to) trade ONLY those two pairs then yes - I would imagine - you'd have to find a way to be able to trade in a range bound AND a trending market otherwise you'd have very few trades.
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@Akrams Aligator, i remember them, the problem is i can't set them up on Oanda charts, because the MA's need to be delayed(offset) by a few candles as i remember correctly, so i did not get the chance to look into it further. will do so on my MT4 charts asap.
@why trading rangebound or trend
for half year now, i have been on the lookout for trend trades always, and i always chicken out when i enter and then things trend for a long time and then i exit with a loss, just to see a moment later that things would have gone my way if i wouldnt have closed the position.
i am trying to understand and trade ranges now to fight this fear in a ranging market, and on the same time make profit while in a range.
i believe if i can start to understand range & trend markets better, and also predict them with a certain probability, i will make consitent profits without having to wait for a market to trend in a direction again.
you said that 20-30% are trends on any pair on any timeframe, i have to disagree with that, on lower timeframes, like M15 or M5, i noticed while watching at weekend, i would have made more profit trading PSAR the opposite way because most of the time it was ranging. maybe i am wrong though...didn't look in every chart, just mainly EUR/USD.
though even if you are right, if 20-30% are trends, wouldn't it be nice to catch some profit on the other 70-80%? am i too greedy?
Charles
And it all makes sense
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