Most of those who trade this method pre select the stocks using a trend indicator like relative strength or MA so if you do historical analysis using that filter the results might be different.
There's no dependable pattern. We've got NR4s, NR7s, and NR9s. May as well include NR3s and NR5s and NR8s. A trend day can be immediately followed by another trend day in the opposite direction or by a continuation. Similarly, a trend day can be followed by a narrow range day, then another trend day (the market doesn't wait four days just because some guru who was short a chapter in his latest book needed filler). All of which is to say that you have to be prepared for anything every day. It's impossible to know whether, for example, Greenspan's testimony will ignite the market or put it to sleep. Likewise, a series of narrow-range days doesn't have an automatic expiration date.
Man, you are in a place a little ahead of this group. Explore the periods before the "inside" bar. When you see these prior condition assortment of situations, then the inside bar will have first, a context and second, a natural fit into a sequence of events that is a longer sequence for decision making. What happened Friday was that summertime was finally demonstrated as usual. Smart money is not too involved during long weekends in the summer. I generally stay in front of Stevie Cohen (3% of market trading) as a way to get pushed. Pushed means being forced further away from protective stops. As another effort check out the periods before "outside" bars. by getting both down you have a referent base for consideration of volatility. Check out the Connors- Hayward compression stuff. If you want make it absolute instead of relativistic to be able to deal with "summertime".
inandlong i just used daily data and did some analysis there. usually i find some indication - yet not necessarily tradeable - on daily data before i look at it in more detail. thanks for the inspiration. peace
easyguru i see the point and will apply it. i use to do this kind of thing mainly on the sp future, since i trust the longer record more in this market than in any single stock. peace
bubba sorry - you are ahead of me. i have to check these people out before i can usefully reply. nevertheless i find your concept of context usefull, since it surely makes a difference if we are currently trading down, up or sideways. to all i tried all variations of lower range days, even something like making a exponential moving average on daily range and look at those days following a day which traded significantly below or above this average. i did not find evidence that direction, traded range, trendiness or the ratio between traded distance from open to close compared to total range was any different on such days following low - however you define them. though there were enough observations to make apply statistics. i did it rather quickly, so there might still be things in there, but so far it is really not supporting usual assumptions. not at all. peace
Hi man, nice posts here. Just to illustrate, GE on Jun 24 was an inside day, and also at least an NR7. The day following is an excellent example of what "seems" to commonly occur. I know db says he is an S/R trader for example and with him, at least from his posts, all else is nonsense. Ironically, trading inside days is all about trading S/R. It also takes advantage of the FACT that low volatility will be proceded by high volatility. But like most will say anyway, knowing when to get out is the key. Don Bright's OO trade is a key example. All the calculations are for the entry. I asked him once about the exit. Paraphrased, he said that was the hard part. LOL.... isn't it always? But the OO trades put him in a profit opportunity that he must manage. Same thing with moving averages.
can it be that several posts of mine on this thread got deleted? I am rather sure that I posted here recently, but do not find these posts anymore. you guys - did you see posts of me that are gone now? peace
oh, here are these posts again. must have been my browser. inandlong i was only referring to the futures. did no analysis so far one single stocks. peace