Strategy: trading the daily range

Forexmike,
thanks for the links. The second one looks interesting.

David

Morning Adrian,
that’s really the assumption on which this strategy is based.

Yesterday wasn’t so much a good day. Sigh!
eurnzd: -38 pips
nzdusd: -35 pips
gbpusd: +30 pips
eurusd: +39 pips.

Total pips: - 4

Took only three days yesterday/today. Not a good day.
eurusd: -50
eurjpy: -40
uscad: trade triggered, currently up 2 pips.

What can I say, a mixed week. I’m not ready to toss this strategy in the garbage as yet. Will ponder some changes to it this weekend and try again for one more week.

David

Hi david

Yes, the second link is definitely better…take a look at the spreadsheets, maybe there’s something useful for you…

Mike

So what about taking the opposite approach? Go long below the close and short above? That is actually the strategy in this 2012 book:

[I]The Forex Trading Manual: The Rules-Based Approach to Making Money Trading Currencies[/I] by Javier Paz.

-Adrian

If you’re interested in “scalping” daily ranges, here is something that you guys might find interesting.

Part Time Wealth Building Trading System - Weekly Scalping @ Forex Factory

tkimble from FF posted this strategy in 2007 and there are still individuals who are making a handsome profit to this day.

Afternoon Adrian,
could you explain this in a little bit more? The link doesn’t help me.
Are you saying that you set a pending long order/limit order BELOW the close?

David

Sort of. His assumption is that the price will frequently make a drive toward the daily pivot. So he doesn’t use the previous close alone, he uses the pivot as his main level for setting up the trade.

Without getting too specific about his particular setups, the basics of it is if the close is lower than the pivot he goes long at close looking to take profit at or above the pivot. He goes short if the close is above the pivot looking to take profit at or below the pivot.

The basic theory is the same: that prices will fluctuate within or around the same levels as the previous day and one can put orders in the market that will simply enter and exit profitably within that fluctuation.

-Adrian

ClarkFX,
this looks really interesting. Lots of reading there to do on it. I will most certainly try it. For me, it says a lot about a system if it has longevity.

David

Thanks for the clarification Adrian. I must admit that anything having to do with pivot points I tend to shy away from. It has always intimidated me. Don’t know why; I’m sure it’s a concept that’s quite easy to grasp. Unfortunately, I restrict my options for learning when I don’t explore. One day soon I will tackle it.
Thanks again for your responses. Very informative and professional.

I continue to set trades with this ‘daily range strategy’ to see how it pans out.

David

I like that this is a weekly rather than daily system. The 30 pip stop seems really tight though (less than 1/5th a typical daily range). It would seem trades would almost never go all week.

-Adrian

Yeah no worries. I brought it up just to say really that you could do the same system you already have outlined only go short above the close and long below (the opposite).

-Adrian

Hello all,
the last few days have been hectic for me and the next week or two is shaping up to be the same. So I haven’t traded this strategy since the last time I said I did.
My initial euphoria on its success has died down somewhat and I’m not sure whether it would’ve proven to be a consistent winning strategy. I’m not sure if I’ll go back yo trading with it. I keep having to cross my fingers and pray for far too many times when I set my trades. Thanks for the advice and input from all.
When I resume my trading, I’ll be trying something else; possibly one that was sent to me in this very same thread.

For those who celebrate Easter, enjoy the holidays; for the rest, have a great weekend.

David

Hats off to everyone adding to this thread! The method aside, it’s one of the first threads on babypips that I’ve read that hasn’t turned nasty within about the second page and each post has actually been helpful & critical.

But I’m also seeing that any “system” or automated methodology really needs black & white rules for entry, TP and SL. Has been interesting reading along :slight_smile:

I second Abritrager on Acid’s call for a MA on the daily, something like a 50ema and take trades in that direction. Would also throw in something like the ADR5 in addition to the previous day’s range. Cheers & good luck.