Range Trading is where most traders get chopped up.

Here is the ES for the last 24 hours. What trades have the highest probability? How not to die?



Here are my Range Trading rules:

1. IDENTIFY FLOOR AND CEILING. Notice the clearly defined tops and bottoms of the range. In this case it is a 16 hour range on a 3 tick range bar on ES. But these same principles can be applied to ANY time frame. The floor was formed after the retest at 3005 following a reversal off of 3013. The ceiling was formed at the retest around 3012. Now I have a range. Draw horizontal lines.

2. DRAW MID-LINE. Once the top and bottom of the range are defined, draw a mid-line. Here it is yellow.

3. MAGNETIZE. Notice the yellow midline acts like a magnet for price. Reversion to the mean is alive and well! And notice the many times the price bounced off the midline.

4. GO SHORT AT THE TOP AND LONG AT THE BOTTOM. Like with most envelope trading, we look for reversals at the extremes. But don't jump in front of the freight train! Wait until you see weakness on your stochastic or MACD or whatever you use to see a shift in momentum/cycle.

5. TAKE ONLY A FEW TICKS. This is the key to range trading that most traders are missing. When you take a short, don't wait to hit the floor. Get out at the "mid-line magnet" at the latest, preferably get out each time you make just a few ticks, even if you haven't hit the mid-line yet.

6. WATCH FOR FALSE BREAKOUTS. Notice the false breakout below 3005. That one was the beginning of a strong reversal to the opposite side! The longer the range, the more violent the breakout. But that doesn't mean the BIG boys aren't waiting to feast. Be careful.

7. IDENTIFY A TRUE BREAKOUT. The range is over only when price continues to move outside the range. If the breakout at 3005 had been successful down to at least 3003, I would say the range is over. I look for an escape that is at least as large as 1/2 of the range. Another way to do this is to use candles and look for two consecutive UP closes above the range, or two consecutive DOWN closes below the range.




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sstheo 

Range Trading is where most traders get chopped up.

This is really good. The thinking required in ranges is the opposite of what works in trends. I read about a million journals (or so ), and mistaking these two are among the major causes of losses I see.

If you read my journal, you will see these mistakes being made all the time. That's another reason I know them so well.

Great rules.

Bob.

The CME Micro E-mini Challenge has been fun, but I think I am out. After getting all the way up to #3 just before the market close today, I decided to get FLAT like a prudent trader does. Little did I know what the market had in store. The ES was at about 2,990 after having a great DOWN day. It is now 7 hours later, and the ES recently touched 2,975, a full 15 ES points lower ($50/point). Because several guys were clearly still fully short, they zoomed ahead.

Unfortunately, I am now in position #71/1400 at last checking. Chances are slim I can regain the ground, but purely for fun, I am posting my official #3 spot here. I have one and a half sessions left before the end. I will try again to get into the top 10, but I will not hold my breath.

Almost time to get back to some real trading.




(Based on $100,000 available sim-bucks, the $5,500 I earned in 3 days is 1.8% per day, although, I have to admit, I took on much more risk than I normally would knowing I was trying to beat out 1,400 other traders in 5 days)



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nice job,looking at the week, you trading is solid.Any chance of seeing some charts?
Bob

bobarian 

nice job,looking at the week, you trading is solid.Any chance of seeing some charts? Bob

Thanks!

The CME sim-trading platform doesn't keep track of entries and exits on the chart unfortunately, and they don't have an export function. I would post all the trades here, but they are not even time-stamped, sorry.

Next week I begin again on my personal Amp account with the micros, and I will post more charts.



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sstheo 

Thanks! The CME sim-trading platform doesn't keep track of entries and exits on the chart unfortunately, and they don't have an export function. I would post all the trades here, but they are not even time-stamped, sorry. Next week I begin again on my personal Amp account with the micros, and I will post more charts. .

i read some of your posts about thechat room you were running.That takes some stones to do that,nice job.Are still involved with the group you traded with?

bobarian 

i read some of your posts about thechat room you were running.That takes some stones to do that,nice job.Are still involved with the group you traded with?

Yes. It has been 3 months now. Interestingly, many people don't hang around long. We don't know if they blow their accounts or just hate us. Perhaps if we charged something for it they would stay longer, LOL. We have had several comments that this is the best chat room people have been in.

Once the competition is over....I would like to see your trades....Trading M2K and MES and getting 2400 a Day.....hard to believe....
STeve

loantelligence 

Once the competition is over....I would like to see your trades....Trading M2K and MES and getting 2400 a Day.....hard to believe.... STeve

All the top leaderboard traders are slinging the max of 10 micros each on MES, MNQ, MYM, and M2k. That is the same as 4 regular E-minis.

And they are not counting commissions, and have no risk restrictions. My trading is WAY out of the norm for this week. And I think everyone's is. Going for broke for 5 days with fake money... could they expect anything else?

Near the close of the "for fun" Micro CME challenge.

I wrote earlier I got creamed overnight. But today I made it back to the top 10.

This has been crazy, and it just shows you that "it aint over til its over"





I am short right now going into the close. We are in a strong long expansion, but I think it is way overdone.





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