Hello! If we know a good trending strategy but it seems it has problems during the range market periods… can anyone tell me a good method to avoid that range market altogether?? I know that might work money loss management so after losing in the range periods we might regain the loses during tranding periods… but it seems kind of risky and unprofessional!
Hey L, learn to trade the range, short high long low, sometimes you can get 3-4 quality trades before a loss.
The Ever High Quality VIPER
LIBR8 _bob
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how you determine when to start trading range and not trend? maybe when you spot the range a new trend actually starts…
Lulian81,
There is a few methods to avoid the market when it ranges and a few are:
- if you are using your max position to get into trends, use half that position or even less to test the market to see if price will actually break out of the range before you commit to your max position.
- Use another pair that is un correlated to the pair your trading to hedge your position.
- Sit and wait it out and if you miss the move, just find another opportunity
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good question
one simple way is to use a very long, slow MACD with settings something like 40-80-50 and look for long position entries only when the histogram is above the midline and rising, and for short position entries only when it’s below the midline and falling
(why is this thread in the “trading systems” department? it isn’t a trading system??)
Tested it on 1 hour chart… doesn’t work…
like almost all indicator-based trade-entry ideas, it seems to work for some people and not for others
one thing i guarantee: if you do the same backtests on the same decade’s data for any liquid currency pair, you’ll get better overall results using that MACD suggestion as an additional bias determining factor for identifying the MA-based entries you mention than you will not using it
you’ll also have fewer trades (in this case with a higher win-rate), of course, but that’s obviously what happens when you add additional entry filters to any automated system
But how to know if a pair si liquid or not??
two different ways, Julian -
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Look at the volumes for their corresponding futures (reliable volume is available for futures, not for spot forex): the high volume ones are also the most liquid in the spot forex markets
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Look at typical spot forex brokers spreads on the different pairs they offer: for example, EUR/USD is the most widely traded and liquid one, and it’s also the one with the lowest spreads widely quoted - the lower the spread, the more liquid the product (this is also why spreads change somewhat throughout a 24-hour cycle: each pair is most liquid and has lower spreads when its underlying currencies/banks are “open for business”, which is called RTH or “regular trading hours”)
I would say buy the EUR/USD right now buuuuttttttt 
The Ever Just Speculating VIPER
PS if it works close/pare at 1.1720 full close at 1.730
The whole point was to catch the bottom of the beginning range, too early, stopped out, but not deterred. But we can see the firmly established tops at this point. 
The Never deterred VIPER
But isn’t possible to avoid range markets altogether using fundamental analysis…so we should enter trade only when relevant news appear …? Or the market moves independently of news most of the time so a lot of good moves will be lost ???
This is a good question. There are a few tools, one is the ADX, here is a link explaining it and a Babypips explainer. Basically when it is below 20 to 25 the market is ranging. It is one of the tools I use. I also use the Ichimoku Cloud, here is another explainer and the Babypips one.
I use both together, as well as moving averages. I have a system that I devised and I write it all down (what the ADX,Ichimoku and Moving Averages are saying) and then summarise it all, it is more visual than mathematical but I can usually work out when the situation is ranging or trending. Another thing I realised is that after a strong trend a range usually occurs. This is definitely less mathematical, but if I have just caught a nice moving average trend then when I take profit I sit out and wait a while to see if a range occurs, without trading again.
Another visually thing I do is simply to draw channels around highs and lows, this usually indicates a sideways or upwards movement. If a range breaks out of a channel a trend can develop.
Can you tell us that strategy with adx, cloud and moving averages?? Or is secret??
It’s no secret, just to explain, very basically the ADX (Daily) shows if the market is trending or ranging. I make a note as follows “Range” or “Trend”, then I look at the Ichimoku Cloud and look for confirmation of the trend or range. If I see confirmation for a range, I next look at the direction of the trend. If Range, no trade. I also then look for higher highs or lower lows to give a triple confirmation and entry points and stop loss levels. I also sometimes use two moving averages to give fourth confirmations (to trends and directions) but mostly use the two Kijun Sen and Tenkan Sen in place of the moving averages as they are often very similar.
When I look for entry points I change to the 4 hour chart to fine tune, with an eye on the daily summaries. This is the basic of the system I use. I also then look at the chart and just look at the price to see if it looks like it is ranging or trending. You could easily exchange the Ichimoku with 10 and 30 day moving averages, it does practically the same thing.
The basic thing I needed to do was solidly confirm if there is a range or trend and then only trade in the direction of the trend. I found it quite eye opening to see how often I would look at the charts and think,“Oh wow, that looks like a great buy!” but by forcing myself through this written system I would realise I was wrong… before placing trades. You could easily add or change things for your own trading style. for example, after determining the trend and direction, use a stochastic on the 4 hour chart as an entry, with the direction established on the trend analysis… or find moving average crossovers, even on the 1 hour chart. Hope this helps.
A good example is what happened Thursday to Friday. In particular I was looking to trade the AUDUSD, My entry was going to be a Moving average crossover. My trend analysis was confirming everything is in a down trend, EUR, GBP and AUD. I got the alert that a crossover to sell on the AUDUSD occured, but I didn’t take it, why? Because I decided to take my daughter to the cinema this day… didn’t trade, oh well!
But what should we do Monday? Buy at the bottom of the Eur/Gbp/AUD fall? No, the trend is still down. Sell if another entry signal gets activated. The trend is your friend, the USD should carry on getting stronger, that’s how my system works, follow the trend!
Just ADX 14 on daily chart to know if there is range or not… Maybe my ADX is broken or something… it doesn’t show any range, just moves randomly up and down 25 … Maybe you use other periods for ADX??
ADX above 20 imply trending conditions.
ADX below 20 imply low volatility or ranging conditions
Red bars means bearish
Green bars means bullish
If green bars is below ADX 20 means bullish trend weak.
If green bars is above ADX 20 means bullish trend strong.
Vice versa
Notice from the chart on Monday, there were lots of green bars under ADX 20. The price action were bullish but price did not travel very far.
Its easy to determine if a price is trending and how “well”. But I can’t understand the value of being able to define a ranging price pattern, which seems a subjective task anyway. If you can trade trends, what need of another pattern which isn’t a trend? There is always a trend somewhere.
So from your chart… not only green and red bar interlace without logic… but also they pass 20 without any significant movement… also they lag a lot… I don’t know how you trade with such thing!!
Combine with multi time frame analysis. eg. if histogram bar is green and above 20 on say daily chart, zoom in to 15min or 1hr chart, wait for histogram bar change from red to green. Ensure ADX above 20 before entering trade. The same can also be done for 1hr or 4hr and zooming into 1min or 5min chart for entry. Stop loss and Take profit. You have to figure this one out yourself.
If you don’t know. it is time to start putting on your thinking cap. I use to bombard my mentor with so many question, until one day. He replied to me " Use your brain!" No offence. Just telling you my personal experience.
When we try to connect the dots by ourself. It is really awesome. You will feel that you really understand. A mentor can only show you the direction. They can’t walk with you the whole way. Ultimately, we have to mature and fight the gruesome battle by ourself.
ps : jin tu lan
By the way, indicators are mere TOOLS to help us visualize better. There is no holy grail indicator or system. The TRADER is the holy grail. Any time-price chart, fundamental data, expert opinion, currency strength meter, indicators, mechanical trading system, trading signal is worthless to a LOUSY trader. If the trading methodologies doesnt work, MAKE it work! Develop Avengers fighting spirit!
Conversely, in the hands of a JEDI trader. Every indicators, trading system, fundamental data, currency strength meter, trading signal, plain time-price chart, other expert opinion becomes the HOLY GRAIL.
How desperate are you to succeed? I’M PATHETICALLY DESPERATE! I will die crying if i can’t become the best trader in world. Do you cry? when you lose a trade? or Do you throw a tantrum? I cry and my heart is bleeding.
I’ll become a FULL-TIME PROFESSIONAL TRADER ONE DAY. A consistently profitable one.