ORB, range contractions and expansions

Discussion in 'Strategy Building' started by OPC, Feb 15, 2003.

  1. OPC


    Dear brethren:

    "If the ducks are quacking feed them!"

    "The quiet before the storm..."

    I am not sure about how the old maxims relate to range contractions and expansions... After reading here and there some ideas about the ORB system, and how it's so popular among mechanical traders and fund managers, it sounds like it's tailed to the mechanical approach as it can easily be translated into software language.

    Murphy's golden rule: "Whoever has the gold, makes the rules."

    Given that a used copy of Tony Crabel's book is worth $1,450.00 and the method seems to be used by most funds nowadays, we might dismystify it here on E.T. After all, there is no holy grail, is there?

    So, for starters, are range contraction/expansion new words for old things? I mean, obviously no one want to buy a top or sell a bottom. Yet, if you want a computer make the trading for you, you have to give it specific commands. Say, if the range has expanded too much, don't buy it or sell it, exit positions. If we have seen a contraction recently, be on the lookout for a range breakout, and so on...

    On the other hand, will this verbiage help an old timer, discretionary trader, or is he going to discover new words for things he can instinctively grasp from years of practice and observation?

    Also, aren't the range contraction or expansion readings already translated into traditional technical information, derived from price, volume and open interest?


    P.S.: The purpose of the thread is to generate discussion about the method, not among members.
  2. the book is now free. a kind and generous et member has it on pdf. go do a search on it.
  3. hmm....i guess the moderators deleted the posting for the crabel book in pdf format. please disregard my previous post and erase.
  4. OPC


    Anyone have a link to a pdf format of Crabel's book or articles about ORB? Would you be kind enough to PM me the link? Thanks.

  5. mgkrebs


  6. OPC


    Thanks, mgkrebs.

    Doesn't Farley cover much of the subject about range contraction and expansion in his book "The Master Swing Trader"? Any difference to Crabel's ideas?
  7. prox


    Message is still there, search for "Crabel PDF"

  8. prox


    It was revolutionary for it's time (80s). Nowadays, you can read about NR4, 6, 7 and WR equivalents everywhere. Likewise, opening range breakouts were probably more effective back in his day. The primary concept is narrow range days tend to breakout into trend days soon afterwards, which as we know .. are what works best for an opening breakout system. He also uses a volatility factor to determine at how many ticks past the 30 minute range to enter on , which I didn't totally understand.

    It's useful information, but hardly worth $1500.
  9. OPC


    Thanks, prox. That's the kind of feedback I was looking for. The idea about range contraction and expansion seems to be a little overdone nowadays. There seems to be a lot of hype attached to the concept.

    For those interested in the range contraction expansion issue, I would suggest Allan Farley's "The Master Swing Trader" instead. He does cover well the subject. Basically we are talking about finding empty, quiet zones, during which there is little or minimal public participation or interest, so as to benefit from low risk entry points, and also as a timing factor. That is, trends usually are preceded by this quiet, low range, trendless transition times.

    Bollinger Bands seem to do a good work with respect to range contraction and expansion tracking, and may be used as a timing tool. You would only expect a major move if there's enough strength in the current price move to expand the underlying volatility (pulling the bands apart). Anyway, as I am not used to BB, I would appreciate any feedback in this regard.

    That said, markets are the same they always were, because they keep changing. (Ed Seykota)

  10. For anyone interested, some of Crabel's work is included in Linda Raschke's book "Street Smarts".
    #10     Sep 8, 2005