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I am currently working on a few range trading ideas and since there seems to be no thread dedicated to this kind of trading, I thought it was important to start one.
One of the principals I follow for trading is diversity. Having already several trend following strategy and counter-trend strategies( shorter time-frame trend following), I figured it important to diversify even more by developing a few range trading strategies. If we can develop one profitable one out of all trials, that would be great.
Anyone has a range trading idea ? Dont hesitate to share on this thread ! Happy trading everyone !
Heres my first stategy. The setup doesn't happen often, but the idea is to have other strategies to compliment this one, so theres no need for it to occur very often. The importance is that the success rate is high enough.
It is quite simple.
These are the indicators you will need :
89 SMA
445 EMA
Keltner Channels 22
Now, wait till the 89 and 445 are tangled in the Keltner Channels.
Once they are, wait till a candle that was or is completely out of keltner (OKC: where a candles high and low dont touch the keltner) comes back toward keltner.
Then, when price touches keltner's outer band, GET IN.
TP Take Profit is other end of keltner Channel
SL stop loss has yet to be determined.
For now, I suggest putting a stoploss with equivalence of pips that are to be gained if TP is reached. Example if other end is 20 pips from entry, then stoploss will be 20 pips.
VERY IMPORTANT : if price moves slowly and keltner moves, TP will change according to the KC....
Perhaps a SL based on a closed candle closing above last high (if were selling) would be better. That is to be determined.
**** if keltner is too narrow, TP could be at the closing of the candle which breaks out of outer keltner band. Now, how do you determine if keltner is too narrow, that could be calculated perhaps with ATR.
Attached is an example of trade
Im looking forward to hearing your ideas and comments.
Heres an example where we have 5 entries : 3 go straight to TP and 2 get stopped out. But notice how the last can be avoided, it comes after a significant double bottom.
IMPORTANT: notice how the 2 losses are OKC prior to trigger but stay near the keltner band. It seems that the farther away the price is from the KC, when OKC, the better it moves within it to the other end once KC is touched again (the trigger)
Notice how the TP could be larger. I suggest to not be tempted just yet to widen TP. I have seen almost 100 of these signals and very often it hits the TP(other outer band) and reverses...
Perhaps in some conditions we could widen TP, if for example : at time of OKC prior to trigger there is double kC BO (break-out) like its the case in this example ( where one cdl breaks out of KC and another cdl breaks out of this last cdl)
I hope to get some feed back. I havent looked at these signals for 2007 and 2008, so if anyones sees the potential, come and help me with the backtesting ! and well figure out when to stay out, and better TP and SL
OH there is actually 2 trades on this chart and both go straight to TP
an EA shouldnt be to hard for this I think. Any experts here willing to enlighten me on what is possible ?
Here we have a bad one. But we get out at about BE (breakeven)
Notice how the keltner TP band moved. You have to get out when TP is reached, even if its only 1 pip!
which one? (shouldn't bars be completely out of channel)?
p.s.thnks 4 shring your ideas, Leo
pps there are diff KChannels (ema,sma based...) - could you please, post one you using (and for less mess - templete : ))))) ? thankyou
Hi fxbs, thanks for your reply. I edited the graph, I put arrows so you see where you get in and out. As you see, the candles are completely out of KC before the trigger happens. Also, I just noticed its on a weekend so I wouldnt get in anyhow. It is still a good example of what could happen.
here is the keltner channel I use with a simple template
Linear Mode
