I'm looking for a /ES mentor -and i'll give you half my profits for 2yrs.

IamTheCasino · Sep 20, 2020

volpri said:
Traders fear trading ranges as they get all excited when price moves to the top of the range and they bet on a BO succeeding. Or they short at the bottom of a range betting a BO will succeed there. When 80% of BO attempts top or bottom fail and within 5 bars or so, price heads back towards the range and price trades to the other side of the range, or to the middle of the range.

Your chart for me is simply trading a larger range PA and afterwards trading a smaller range PA that is within the larger range. And it offers trading a tight bull channel too. And there was a range prior to the larger blue box range. Traders see these big bull bars or bear bars racing to the top or the bottom of the range and almost invariably take the wrong side and get trapped. Generally, (there are exceptions) before I would trade a BO of a range I want to see price show me IT IS a successful BO. Not that it just broke out of the top or bottom. Until then I generally fade the outer limits of the range.

Like you said traders need to think in terms of equilibrium. Ranges form because bullish and bearish institutions think that area is fair value and they are about equal in the pressures they exert on the markets. Eventually one side will exert more pressure and we see a successful BO.

I distinguish between range behavior and an established range. There are 1 bar range behavior that can be a PB before continuation of the previous trend. I like to see 20 bars of sideway range behavior and then I employ range trading tactics. Occasionally, I will employ them around 15 bars of sideways movement.

The same basic pressures are present in channels. Why? Because channels, bull or bear, are simply tilted ranges. However, the percentage changes a little from 80% to 70%. And a trader has to factor in that bull channels are bear flags on a larger timeframe and the eventual successful BO will likely be south (notice the word likely.....) if the successful BO of a bull channel is north then I want to be long and look for a measured move. Because that is the least likely event and when that takes place I want to go with it. Bear channels are bull flags on a higher TF and the likely successful BO will be north as the trend on the higher TF continues. However, if the successful BO of a bear channel is south then I am going short for a measured move south. That again, is the least likely event taking place.

Successful BO has to be defined. By that I mean a BO with FT (follow through). 80% of BO attempt of ranges top or bottom fail and become traps trapping traders on the wrong side. 70% of BO attempts of channels are traps trapping traders in long or short.

One more concept that should be considered is market inertia. Equilibrium in channels and ranges tell us bears and bulls agree, to some degree. More so, in slightly sloped broad channels. In steeply sloped tight channels one side is obviously stronger. But in slightly sloped channels and sideways ranges equilibrium is in play, and so is inertia, which says the market tends to keep doing what it is doing until something changes and one side or the other exerts more pressure, i.e. enough to cause a BO to be a successful one.

Range within a range below on your chart. Yellow range box on the right side. It also has a tight channel racing from the bottom left hand corner of the blue range box to the top of the blue box where your green arrow is at. That tight bull channel was obviously successful BO, i.e. one with FT of the yellow range box to the left of the blue box. The tight bull channel was basically a 2 legged move up to the top. So, if a trader waited to see the BO of the yellow range he would likely only capture the second leg of the tight bull channel. There are ways to better one’s entry and capture more BEFORE the successful BO occurs but this is enough to digest right now.

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Al brooks is that you? lol

themickey · Sep 20, 2020

IamTheCasino said:
Al brooks is that you? lol
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Ya good catch.

IamTheCasino · Sep 20, 2020

themickey said:
Ya good catch.
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Only reason I say that is because its what i have learned in his course. Cant complain, im just glad im retaining what ive learned so far.

volpri · Sep 20, 2020

IamTheCasino said:
Al brooks is that you? lol
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No. I been around way before mr brooks books and courses came out. I do like his way of trading PA.

volpri · Sep 20, 2020

themickey said:
Ya good catch.
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LOL

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I'm looking for a /ES mentor -and i'll give you half my profits for 2yrs.

IamTheCasino

themickey

IamTheCasino

volpri

volpri