how can i avoid sideways price action

How do you deal with breakouts that keep going and don't retrace?

 

Those you trade, of course

 

lol

 

I have been trading only stocks but recently have looked at trading futures as well for the 23 hour daily bar. Since index futures open in the evening, I can catch Asian and European markets before U.S begins creating a good sized daily range.

I believe discretionary 'day traders' should only trade AWAY from open prices. See for yourself, create a bracket around a daily open price based on the recent average range of the open to high/low (the smaller of the 2). In other words, if it passes that distance odds are you are on the right side to catch a full avg daily range.

Nothing else you are seeing on a chart provides this kind of R:R

FS

 

freedom, are you saying that your theory is once it moves outside the range it will (generally speaking) continue in the same direction?

ie, if it moves above the high band, look to go long?

 

MJ, that is correct. I'd love to take credit for it but Barry Rudd, Toby Crabel, and The Rumpled One are a few of the people I have heard speak of this. It isn't the only way to trade but I would welcome any logical agrument that shows there is a more easily available methodology for an average retail trader to consistently profit from.

Just look at daily/weekly/monthly opens. Not alot of neutral bars with short wicks.

 

Hi Freedom,
Newbie trader here... Can you ellaborate on this or point me to a site where i can get more infor.

Thanks.

 

This rather old but still profitable technique is called the "opening range breakout" and works best with financial instruments like the Nasdaq100 index, the S&P 500 index, some European indexes and stocks with large intraday range.

You can see the backtest on "The compleat Day-trader" by Jake Bernstein.

 

To the original poster, you will also want to avoid trading when the ADX technical indicator is below 40, as this indicates that the market is choppy, even though there are techniques to profit from that type of market condition (but that's another story...).

 

To avoid sideways


If long - turn your screen onto its left side

If short - turn your screen onto its right side

Just a thought

RN