Tight trading ranges

Discussion in 'Strategy Development' started by parttimetrader, Apr 27, 2004.

  1. From around 11am to 2pm today the ES was in a fairly flat ( 1 to 2 points ) trading range. I'd like to try and avoid trading at all during these kind of ranges.

    I've read lots of times never to trade during lunch ( from 12pm ET to 1pm ET ) but todays range was far longer than one hour.

    Also, i've thought about looking at the volume levels & if it's below a certain level ( say 10 min average? ) then i don't trade.

    Does anyone have any techniques that might help?

    TIA
     
  2. You didn't hear about it?
    Half the NYSE specialists had an extended lunch session today (new restaurant down the street from the exchange had a special on), hence the inactivity on ES.


     
  3. Hmm, seems the special was bad as they came back and sold :)
     
  4. nkhoi

    nkhoi Moderator

    tomorrow, call restaurant ask what for lunch
     
  5. tharnett

    tharnett

    Parttimetrader,
    One strategy, as you mentioned, is not to trade. This is a good solution, however, when do you know when not to trade? My best trades have been during "lunch time". I have found tracking volume is definitely one of the best ways follow whether trade is active or not, but as you may or may not know, there can be heavy volume with a tight range or light volume with a huge range. One of the best strategies I have found is to follow directional volume, that occurring on the bid and ask. I have found that when this levels out (at least for the stock index futures), oftentimes the market will be sideways. When the directional volume picks up, the market may begin trending again. This is one of many potential strategies, but I have found it helpful for me.

    Regards,
    Trevor
     
  6. Parttimetrader, I think it's all how you approach it. I know a trader who makes the majority of his money during lunch. When he thinks it's starting to channel he'll take lots of upper lower counter range trades. Kinda risky if you are not quick on your feet. Have you thought of just leaving your stop/ target and enjoy a lunch yourself? Put some lines on your chart with loud chimes to notify you when it breaks out.
     
  7. Thanks for the info. I'll give the directional volume idea a test. Are you using an indicator from a data service or calculating it yourself? I tried a similar technique with the TICK - trying to avoid trading when it was just floating around the zero line but i think the volume method is better.
     
  8. Yeah i guess the market conditions that don't work for me are great for others. Maybe i should have a system for choppy conditions also.

    The system i'm working on is an automated program trading system, so it always has bracket orders ( stop loss & target ). I'm just trying to filter out bad setups.

    Thanks for your feedback.
     
  9. tharnett

    tharnett

    Parttimtrader,
    I do us an indicator and program for this information. This information, as it sounds like you have already found out, is very difficult to come by. The information is very dynamic and difficult to track unless given the right tools. Private message me if you are interested and I will fill you in on the details.