Here's a followup on a CL trade I made around the time I was watching Brent and 6E last night: I had noticed Brent was already strongly recovering from the right down but CL wasn't (yet). Analyzed CL action and put on a long position with a reasonable target based on the previous session's volume profile (this exit probably could have been better but I considered the holiday and didn't push it). Got ticked out so placed another entry (coincidentally where I was last stopped about 10 minutes earlier) with the same entry about 10t below the current price at the time after noticing thin liquidity on the DOM (meaning if I'm noticing it, others are noticing it and are probably going to take advantage of that) hoping to get filled on a stop run or bid pullback. Got filled with not much heat against me and went to sleep. Trade exited overnight/early morning with a 73t target (with price continuing above the value area and then heading back to VPOC). I didn't expect it to go so high given holiday volume but am content with the trade regardless. Now notice there were sections of quasi-breakout looking territory that all got smacked down. Pretty much every single one of them (including the ride down to this area in the first place) got sold into - meaning weak hands and stops were fueling bid-side liquidity the entire time. There actually was an additional risk here that if a big enough player were present they might have attempted to push it below the consolidating range to stop-run all the players who were long at the bottom of the range (for instance: me) and then make the final run up. I went off the assumption that this was the bottom of a known channel (meaning there's probably other bid-side liquidity there), price hadn't made any significant attempts to push even lower, and holiday/overnight volume probably wasn't going to make that risk happen. Footprint chart of the range and final breakout: Buying breakouts here would have just resulted in a bunch of losses unless you were a wizard at predicting when the breakout were likely to happen. Why bother doing that if you can be a wizard at predicting the bottom of the range and going long there? This is why I don't see the point of trading off a breakout specifically (meaning using a buy stop) because you're a: not only giving up profits, but b: taking on more risk for a low probability trade (compared to the amount of fake outs that will happen). If you understand the range and structure such that you know where to put a breakout entry on, why not just go long before that? You won't know where exactly to put the breakout entry at that won't get triggered before the real move (maybe 59.54?) and even if you're successful at it the profit is significantly worse than just buying support. Sure, you may be wrong and there ends up being no breakout, but I'll take the 7-10t loss to have the additional 40t of profit a non-breakout trade would have. Every single red zone above was an opportunity to get screwed. One does not know how long this range is going to last and will not even know the best time to consider the breakout likely to happen. We can see those higher lows happening, but consider a couple areas: That bottom where I got ticked out. That top where trapped breakout traders and other longs most likely contributed to said bottom. That H/S looking pattern that should probably be ignored as noise given that price just took a 80t nose-dive into this range before-hand (prior to 1:07). About the only place where one probably could have put a breakout style trade on would have been towards the end of the range (which you don't even know at the time) and in addition it's not safe from stop runs or other weak longs driving the price down again. At the time this is how the action looked when I put my trade on: As mentioned before, target was placed conservatively at a low volume node (shelf) that I expected to be hit if price did actually head back up. Also notice the double fakeout before price plummeted. Trapped shorts and trapped longs. One can avoid all of that by either taking advantage of it (however, you've got to have a really good read on what's going on here - or just have assumed a short bias near the PDC level) or simply not trading in that value area and waiting for a less ambiguous trading zone. Plenty of opportunities to get screwed? You bet. See all those 0s on the ask-side on the final leg down? Nobody's hitting the ask because the type of players who would do that here (retail) are all getting stopped out. See all those numbers on the bid-side? Those are long-side stops further fueling selling combined with whatever residual selling pressure still present. Who do you think's buying from those stopped out longs with already present resting limit orders? The type of players who don't hit the bid or the ask to get their position on. This is why I don't even think of trading breakouts - there are simply too many unknown and known forces working against their success. Ironically we're full circle back to what actually works: buy support and sell resistance.
One could argue that that's what ranges are for - larger positioning before a breakout. If something were range trading for a week straight that'd actually be pretty nice. Who needs breakouts when you can just BLSH and SHBL over an over... in reality that isn't what happens.
Possibly.., but if they do - I think they fall far short in understanding I believe it correct to say not all ranges are equal - in a few aspects I also believe ranges occur When a position being worked - vacated / established / reversed (this also includes when price being purposely held at bay (supported / suppressed)) Or - when one side trying to take control - and the other not relenting Or - when neither side interested in taking control (lunch / just prior to an announcement - are a couple that come to mind) Any other conditions where a range materializes..., that I'm not mentioning?? In truth there is - but we're here to learn - not watch me blather on RN
Redneck, You ask things I'm not willing to answer but there are two concepts I will briefly mention. 1) Multi-timeframe usage, looking left and examining for potential "tests" from higher timeframes catapulting ranges into conclusion and beginning the resumption of "other trends" and/or the support/resistance of "other ranges", specifically the element of time via convergence of confluence. 2) Most ranges don't last forever
I was thinking one who understands ranges - their importance - and how to (properly) exploit em and the subsequent BO But..., bullshitter / real deal also works RN
Autodidact, I don't think there's any big top secret info here on the how's or whys of ranges. It's not even what holds traders back from exploiting the situation - its their own impatience that does that. Redneck I pretty much agree with you on all points about ranges being about positions (sometimes competing ones) being worked. Atleast for ones that aren't 100t ranges and the like. There's also small timeframe scalpers taking advantage of ranges as well although I'm not sure how much realistic volume they make up vs other small traders in the mix. I can't really see large players heavily scalping but I can see them taking advantage of false moves (in fact helping create them) and scalping as a side effect.