Nexas's Intraday Range Bar Trading
Hello fellow traders,
I know many of you have been trying to understand the joys of this trade for a long time but could never seem to make a breakthrough. There could be many reasons for this, and I won't try to explain them all in this article, but what I will do is provide you with a system that I have used very successfully to make profits from the market.
Now, this system is not going to be a magic bullet or magic beans, it is just a way to make money from the market that still requires a little effort and discipline on your part. However, at its core it is relatively simple and easy to follow, and it is also a system that goes some way to eliminating much of the noise commonly found on intraday charts.
Okay, that's it for the system.
chart
The range charts I use are price-based charts rather than our usual time-based or volume-based charts. I won't give an in-depth overview of scope diagrams here, but if you're interested and want to learn more, do a Google search and you'll find many articles about scope diagrams.
Now regarding the charting platform, I use Ninja Trader which offers range charts as standard, but if you are a Metatrader user I'm sure you can get indicators that do the same or similar job.
I use two different ranges, 4 and 8, and 3 moving averages as shown below.
4 ranges --> 20 EMA, 60 EMA, 100 EMA
8 ranges --> 20 EMA, 60 EMA, 100 EMA
I use 4 in fast-moving markets so I can see clear direction, but if this starts to get a little noisy I'll upgrade to 8.
I hope you're all paying attention so far.
this pair
I only trade the EURUSD currency pair (I also trade eminis). The reason for this is that this currency pair is much cheaper to operate and when you day trade you need to stay focused and I don't believe you can do that by trading hundreds of different currency pairs. You always end up missing the action. Additionally, you get enough opportunities to trade EURUSD without having to watch other currency pairs.
system
Ultimately, this is a swing trading system. We only trade pullbacks during trends. So the first thing we need to do is define a trend. Now I know we can look for higher highs and higher lows in an uptrend and the opposite in a downtrend, but since we are so close to price I would like more confirmation. This is where MA comes into play.
If 20 is above 60 and 60 is above 100, then we are only looking for longs. If 20 is below 60 and 60 is below 100, then we only look for shorts. Is it clear enough so far?
Now for pullbacks (or congestion) we need to see momentum in the price and therefore as well as the moving averages we also need to see the price moving significantly and not just slowly moving in any direction. Once we have this momentum we look for candles to start the retracement, we need at least 4 candles to retrace, meaning we cannot enter before the 5th candle opens.
Now, once we get a pullback (you can use trend lines to control the price if you like), you will wait for the candle to cross the trend line, which is usually the open of the next bar, unless it's a bit noisy, in which case you may need the price to move further. On a breakout, you enter a position and place your stop loss after the recent move. Your target is roughly where the uptrend was in the previous uptrend and the downtrend was in the downtrend. When I say roughly, you certainly want to get a good risk reward, so you need to try and run your trades for as long as possible, although this is a feeling thing. You watch the price react when it reaches the first hurdle.
risk
You can place multiple trades in a day, so to protect yourself you need to consider an overall daily stop loss. This is the maximum you are willing to lose in a day and then divide it into at least 6. This will allow you to make a few losing trades in a row and still make a profit when the market moves.
Okay, that's enough for me now. I'll update with some screenshots and additional thoughts and insights later. I just gave you some bullet points that will seem logical once you read them a few times.
As we progress I will provide you with more information on the actual trades and the results of my trades etc.
until next time
nixas
I know many of you have been trying to understand the joys of this trade for a long time but could never seem to make a breakthrough. There could be many reasons for this, and I won't try to explain them all in this article, but what I will do is provide you with a system that I have used very successfully to make profits from the market.
Now, this system is not going to be a magic bullet or magic beans, it is just a way to make money from the market that still requires a little effort and discipline on your part. However, at its core it is relatively simple and easy to follow, and it is also a system that goes some way to eliminating much of the noise commonly found on intraday charts.
Okay, that's it for the system.
chart
The range charts I use are price-based charts rather than our usual time-based or volume-based charts. I won't give an in-depth overview of scope diagrams here, but if you're interested and want to learn more, do a Google search and you'll find many articles about scope diagrams.
Now regarding the charting platform, I use Ninja Trader which offers range charts as standard, but if you are a Metatrader user I'm sure you can get indicators that do the same or similar job.
I use two different ranges, 4 and 8, and 3 moving averages as shown below.
4 ranges --> 20 EMA, 60 EMA, 100 EMA
8 ranges --> 20 EMA, 60 EMA, 100 EMA
I use 4 in fast-moving markets so I can see clear direction, but if this starts to get a little noisy I'll upgrade to 8.
I hope you're all paying attention so far.
this pair
I only trade the EURUSD currency pair (I also trade eminis). The reason for this is that this currency pair is much cheaper to operate and when you day trade you need to stay focused and I don't believe you can do that by trading hundreds of different currency pairs. You always end up missing the action. Additionally, you get enough opportunities to trade EURUSD without having to watch other currency pairs.
system
Ultimately, this is a swing trading system. We only trade pullbacks during trends. So the first thing we need to do is define a trend. Now I know we can look for higher highs and higher lows in an uptrend and the opposite in a downtrend, but since we are so close to price I would like more confirmation. This is where MA comes into play.
If 20 is above 60 and 60 is above 100, then we are only looking for longs. If 20 is below 60 and 60 is below 100, then we only look for shorts. Is it clear enough so far?
Now for pullbacks (or congestion) we need to see momentum in the price and therefore as well as the moving averages we also need to see the price moving significantly and not just slowly moving in any direction. Once we have this momentum we look for candles to start the retracement, we need at least 4 candles to retrace, meaning we cannot enter before the 5th candle opens.
Now, once we get a pullback (you can use trend lines to control the price if you like), you will wait for the candle to cross the trend line, which is usually the open of the next bar, unless it's a bit noisy, in which case you may need the price to move further. On a breakout, you enter a position and place your stop loss after the recent move. Your target is roughly where the uptrend was in the previous uptrend and the downtrend was in the downtrend. When I say roughly, you certainly want to get a good risk reward, so you need to try and run your trades for as long as possible, although this is a feeling thing. You watch the price react when it reaches the first hurdle.
risk
You can place multiple trades in a day, so to protect yourself you need to consider an overall daily stop loss. This is the maximum you are willing to lose in a day and then divide it into at least 6. This will allow you to make a few losing trades in a row and still make a profit when the market moves.
Okay, that's enough for me now. I'll update with some screenshots and additional thoughts and insights later. I just gave you some bullet points that will seem logical once you read them a few times.
As we progress I will provide you with more information on the actual trades and the results of my trades etc.
until next time
nixas
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