Zen Trading Tech

1. Introduction
2. Why the 18 Bar Range?
3. Data on the 18-Bar Range
4. Link Indicator
5. Trading a Measured Move of the 18-Bar Range?
6. Targets for Trading a Breakout of the 18-Bar Range?
7. Breakout Targets of 50% of the Range
8. Conclusion

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Introduction

• In this article, I propose ways to look at the open of the day and possible swing targets.
• I will use the 18-bar range show ways to research it.
• Then we will explore possible targets, probabilities and hit rates for a trading system.
• My hope is that this post inspires you to take ideas you hear from other traders. Then, turn those ideas into research. Eventually, transform them into trading strategies.
• If you were in the trading room last night, I mentioned these targets while I was short. This move ended up not far from the low of the day. Yay for me.
• It doesn’t mean these targets always work, but the data gives me confidence in my trading. I hope this helps you to discover yours!

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Why the 18 Bar Range?

• Because 18 is a magical number? No.
• In futures trading in the RTH session, the high or low of the day forms early.
• So it makes sense to use this to inform our trading later on.
• See the chart below (referencing the 15 min bars).
• By bar 6 on the 15 min chart (90 minutes into the session), 79% chance we’ve seen the high or low of the day. Thats an edge.

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Data on the 18-Bar Range

• We can pull data from TradingView into excel
• I’m comparing the range to a measure of volatility.
• I’m using the average range of the bars on the RTH Daily chart with an 8-bar lookback (ABR / ADR)

• We can also use an indicator (link below)

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Link Indicator

18-Bar Range: A Simple Tool for Traders Studying the Open of the Day

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Trading a Measured Move of the 18-Bar Range?

• Enter on a breakout? Well that data says that depends.
• Interestingly this was way lower than I expected.
• BUT – I suspected that a small 18-bar range was good for a breakout – and have been trading that for a long time so it confirmed that piece.

Data below

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Targets for Trading a Breakout of the 18-Bar Range?

• Lets expand out research into more ideas
• It seems the simple go for a measured move of the range is a non starter.

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Breakout Targets of 50% of the Range

• What does that mean for our chart above?
• I adjusted the measured move to look at the 50% of the range
• That means we need to work on our stop location to make it suitabe.

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Conclusion

• In this article, I proposed some ways to look at the 18 bar range and researching it.
• We looked at measuring the 18 bar range. We also projected swings. We found that it’s actually low probability to get a measured move unless the range is small.
• We did this using the average range on the daily chart.
• I then examined profit targets based off that range. We generated a variety of higher probability options.
• These require dynamic stop management for the setups, and I’ll leave you to explore those on your own.
• Hopefully this post has inspired you. Take ideas you hear from other traders. Turn them into research. Then, turn them into trading strategies.
• If you were in the trading room last night, I mentioned these targets, and I was short for these targets. That was not far from the low of the day.
• It doesn’t mean they’ll always work, but it does give me confidence in my trading. Thanks for reading.