Trader Skills #23: Trading Ranges Second Entries

Summary

– Trends BO and FT

– Trading Ranges don’t – so they fail and reverse and FT

– So fading BO’s in the TR is the key skill to develop

Investigation

Fading the 2nd Test of the 1/3s has an incredible hit rate – but waiting all day for these 5 trades – hard not to get sucked in

– In the chart below, you can see one side DOESN”T get the 2nd entry… that’s a sign for things to come.

Continuing from YD range – Opening in Middle of YD TR – technically the “1st” signal was the 2nd.. but easy to miss – plenty of S SB higher

– So now we can see that the TR starts from the last leg – the top of the last SX and low of the last BX being magnets.

BR Channel but TR price action – lack of a clear BO and FT with consecutive closes… back to MA

– On the chart above, once the reversal to B9 happens, let the L2 go and wait and see if it fails – if the L2 works then new LOD likely and there will be more Channel entries likely.

– So what about when the range breaks out finally?

Failed BO above, but deep PB buy setups around 50% which so urgency

– So which range is the “range”?

– Well we can combine them like this chart

In YD range, but open mini range – scalp take quick profits, exit at MA is usually good

– In the transition from trend to trading range a flag fails. See below once way to analyze

BL TFO, BL Spike and channel – endless PB down – test low of channel = TR

– Once we went below B1 it became a larger trading range

– It’s a good technique because even if it fails, that area becomes a secondary trade like the below chart

BL SPCH, testing CH lows, then BR failed on 2ES, BL BO and test back down

– the market tries one way and then the other. But there are signs that the market is building momentum before it gets out of the TR.

– See below for a 2nd failed attempt at a BL BO led to multiple short trades

Failure to get a strong BL BO above a strong BL Spike, then MTR down – look at increasing momentum to the short side – you can take trend entries – L1 and L2 especially at MA

– So how to draw the right TR before you can see the whole pattern?

– I like to use the gap, the breakout point as my range.

– Here you can see sometimes it is the whole leg from back in the range

– TR are forgiving if you trade small and scale in

Clear WB strong B SB, then BO and PB for another good long entry – perhaps it was better to ignore the short side until the two legs have finished?

Conclusion

– Trading range trading is heavily dependent on seeing the range first and then taking a second reversal.

– But as the range shifts then it becomes less clear, and traders are more likely to EXIT on strong bars not stay in.

Enjoy!

Zen Trading Tech