In the picture I attached you will see two types of trading days. On the first example day the price goes straight up, and on the second example it goes up, bounces against resistance and comes back down, and back and forth. Neither day is a trend day, or a breakout day, so they could qualify as range days. Yet, I only make money on the second type of day, because I have a counter trend system, that makes money when the price bounces against resistance or support, and the more it bounces the better it is. I am trying to find a way to measure and define what exactly is the difference between day 1 and day 2. I think that maybe a way would be to measure intraday range. Whereas on both days the daily range is just the same, a range measured every ten minutes might differ. But this is not good enough still. Does anyone have any suggestions?
Trade two systems at the same time, one that does well on trend days, and one that does well on back and forth day, which you claim to already have. Both have to be winning systems for the two to make money together. nitro
Welp, the difference between these two is of course, the slope of the line. But, you are not gonna convince me that the first line is not trending. And so is the second one for that matter...
I think your question would be easier to address if the example charts had distinct periods (e.g., candles or bars) rather than continuous lines.
I've been doing this for the last year with an astonishing level of success. I use two separate trading accounts consolidating them at the end of the day.
Ok, I am sorry if I wasn't clear and thanks to everyone for trying to answer. I guess I am the first who isn't really clear about what the problem is. I hope people can go on discussing their ideas, despite the fact that I am not solving my problem. I just wanted to know how you could measure (short frame range, rsi...?) the fact that price keeps on bouncing against a given level, rather than moving for long runs, one way or the other. What I do know is that you cannot measure this through daily range, since you could have two days with the same daily range, and yet they could be totally different on an intraday level.
travis, 2 things off the bat: 1) Average True Range of a shorter time range will likely be smaller in the second chart; 2) Momentum indicators will show a big difference (RSI, MACD, ergodic, etc). Again, you might have to go to a smaller time frame. Also, looking at the action of the previous bars might help predict the probability of a trend or trading range in the following bars. Wide range reversals, inside days, etc.