Identifying ranging markets

Lazzie · #1 12th October 2007, 02:02 PM

A quick question on ranging markets. What is the best way to identify ranging markets? Because if you trade moving averages you normally end up with more losses when the market is choppy. I trade the S&P e-minis and what I normally do is look at the 5 minute chart and if price isn’t seriously penetrating the 10ma set on high I wouldn’t normally take a long, and same goes if it doesn’t seriously penetrate the 10ma set on low I wouldn’t take a short. I stay away if the candles are alternating red/green/red/green. I want at least 3 candles of the same colour in a row before I take the trade. Does anyone know of any indicators or any better ways to identify ranging markets?

Lazzie.

beginner_av · #2 12th October 2007, 02:37 PM

Trader's secret series

Another crude method is to use an ma like 20 period and see in the last n days/bars, how many times price has touched/crossed it (or if you are computer savvy, distance between ma line and close etc). if there are multiple touches, crosses in the short time frame, its in a range. if distance is increasing, its momentum as prices leave the lagging ma far behind (one of the greatest advantages of MA lag).

beginner_av · #3 12th October 2007, 02:39 PM

Pls remember that just color of the candle doesnt indicate up or down mkt, its just relationship between open and close in that timeframe.

biyasc · #4 12th October 2007, 02:42 PM

Quote:

Originally Posted by beginner_av

Pls remember that just color of the candle doesnt indicate up or down mkt, its just relationship between open and close in that timeframe.

color of the candles just helps to identify a up/down day without knowing the open/close value.

ash.investor · #5 13th October 2007, 08:14 PM

ADX, RAVI and Aroon can be used to identify whether the market is in trending or range-bound mode. But these are lagging indicators.

I would suggest if the market fails to break it new highs/lows, then it is an indication of a range-based market.

Regards,
a$h.investor

Lazzie · #6 14th October 2007, 05:41 PM

Thanks guys.

Shishya · #7 14th October 2007, 07:52 PM

Quote:

Originally Posted by Lazzie

A quick question on ranging markets. What is the best way to identify ranging markets? Because if you trade moving averages you normally end up with more losses when the market is choppy. I trade the S&P e-minis and what I normally do is look at the 5 minute chart and if price isn’t seriously penetrating the 10ma set on high I wouldn’t normally take a long, and same goes if it doesn’t seriously penetrate the 10ma set on low I wouldn’t take a short. I stay away if the candles are alternating red/green/red/green. I want at least 3 candles of the same colour in a row before I take the trade. Does anyone know of any indicators or any better ways to identify ranging markets?

Lazzie.

I follow Jake Bernstein's method of drawing 1 SMA of the High and SMA of the low, and wait for atleast 2 candles above the SMA line or below to confirm that we are entering a trend.. is pretty simple but works well on intraday charts..

CreditViolet · #8 14th October 2007, 08:35 PM

Quote:

Originally Posted by Lazzie

A quick question on ranging markets. What is the best way to identify ranging markets? Because if you trade moving averages you normally end up with more losses when the market is choppy. I trade the S&P e-minis and what I normally do is look at the 5 minute chart and if price isn’t seriously penetrating the 10ma set on high I wouldn’t normally take a long, and same goes if it doesn’t seriously penetrate the 10ma set on low I wouldn’t take a short. I stay away if the candles are alternating red/green/red/green. I want at least 3 candles of the same colour in a row before I take the trade. Does anyone know of any indicators or any better ways to identify ranging markets?

Lazzie.

Try the Keltner Channels. Use it creatively going beyond the "Help" file contents.

beginner_av · #9 14th October 2007, 09:18 PM

Now that Sir CV has already let out the greatest secrets

you can also try a combination of BB and Keltner to identify anything from rangebound to low volatility mkts (though I am sure Sir CV's method will be light years ahead of mine)!

Quote:

Originally Posted by CreditViolet

Try the Keltner Channels. Use it creatively going beyond the "Help" file contents.

kkseal · #10 14th October 2007, 09:19 PM

Quote:

Originally Posted by CreditViolet

Try the Keltner Channels. Use it creatively going beyond the "Help" file contents.

Creatively? Ok, let me give it a try

How about a Median of Bollinger & Keltner ? (with the BBbandTop based on True range Highs & BBbandBottom based on True range lows)

Regards,
Kalyan.