Trading in sleepy markets.

Discussion in 'Trading' started by piezoe, Oct 2, 2006.

  1. piezoe


    I usually trade the emini Russell. Today, from roughly 11:30 to 12:45 est, the Russel went to sleep and traded consistently between 730.94 and 732.13.
    When this happens, i would normally go out and prune my roses. But i have recently started trying to take a little from these narrow trading ranges. The breadth, 9 MA, and fast line on the MACD were all indicating a little up rather then down. After 3 boring candles in a row, i entered long with 10 contracts at a couple ticks above support and sold within a few ticks of the mid-point between support and resistance, for a few hundred bucks.
    I have now done this a few times in similar markets with mixed results, but generally favorable. The risk to reward does not look so favorable, but this seems to be a fairly high probability trade, as the only requirement is that the market continue what its been doing and move back through the mid point of the trading range once more. This seems a pretty good bet during the lunch hour, when in general there is not much action and the market is moving sideways.
    I don't know how long i'll continue this
    experiment, but i'm wondering if any of the rest of you try to trade in these sleepy markets by taking a little out of the middle of what is not a very large range. What is your opinion? Am i going to regret not pruning the roses if i continue with this nonsense?
    I was able to take a couple thousand out earlier with my usual method before the Russel dozed off, and of course, after lunch, things got considerably more interesting.
  2. Try the same thing on the Friday after the Thursday American thanksgiving. I love trading on that day. I also like to hedge my positions with long options for this style of trading.
  3. nkhoi

    nkhoi Moderator

    yes, after you identify the range try to sell near the upper range and buy near the lower range, the sooner you id the range the better this trade will work, by the time everybody recognize the range it is time to put on a bracket outside of the range.
  4. BCE


    I prefer to trade breakouts or breakdowns out of the range which I did with this same contract today. But what you're saying works well at times too. Just use tight stops. Good trading to you. :)
  5. dan05


    I used to trade that in the ES in the early 2005.

    Now I follow a system that helps me identify if we are on a trend or flat tome of the day. If flat, I enter into that kind of trade.

    BTW, how much areyou paying for comission? You can find your selft trading too much. At least that happened to me a year ago.

    Take care.
  6. piezoe


    Thanks for the comments. I especially like the suggestion re day after Thanksgiving. I'll be anxiously awaiting Thanksgiving this year. To Dan, re comissions. That a very good point and obviously one has to have a sufficient range and enough size to make the trade worth while. The Russell trades in 0.1 increments (what i'm calling a tick), so on 10 contracts that's increments of 100 bucks. My round trip cost is $70, so i am sure not interested in trading one tick. I'd like to have a good lick at making at least 3 ticks, so i want the trading range to be in the neighborhood of double that or more. If the range is too small, i just have to let it pass. I am going to go either long or short, but not both, depending on whether the over all trend based on longer term indicators is up or down. My thinking is that if you trade in the direction of the longer term trend you are less likely to have a breakout move against you during the brief time you're in the trade. This is definitely not my main way of trading the Russell emini. As someone else said, they usually trade breakouts, and that's what i usually do as well. This business of trying to take a nickel from a trading range is just something i'm playing with to see how it averages out and to have something to do while i'm waiting for the market to make a move.