Range Trading with Multiple Lots

Student’s Question:In the Range Trading Webinar, a multiple lot strategy is mentioned where one lot can be closed to lock in profit while the other lot can be left open for the potential of a greater gain. Could you show how that would work with a chart?Appreciate it.Instructor’s Response:Good question……Take a look at the chart below……

 


In a range we want to buy at support. So at the green support zone, we would buy two (multiple) lots and set our stop at the level of the yellow line below the lowest wick that penetrated support.Then, at approximately half way through the range, we would close out (sell) one of the lots, thereby locking in that amount of profit and move the stop to breakeven on the remaining lot.We would then let the remaining second lot trade up to resistance (the top of the range) and close it out at that level or just before. That would be the ideal scenario. However, if the trade does not make to the top of the range and simply retraces all the way back down to support, we would be stopped out with a breakeven stop…in other words, no loss/no gain. But we would still have the profit from closing out the first position at the halfway point.This strategy allows a trader to lock in at least a moderate level of profit (assuming of course that the trade has moved in their favor to a certain degree) even if the trade does not make it all the way to the desired target level or limit.


Attached Files:

Posted By martybonner : 06 October, 2020
Related Article

Have you ever had a feeling that some greater power in the market has singled you out and is doing everything in their power to make your trading life a misery.     Because it seems every time you enter a Forex trade, almost immediately you find the market reversing on you?   The market is probably just ‘rigged’, or it must be your broker stop hunting you right?   Did you ever consider you might be chasing price around the chart, consistently entering the market at bad prices. In this article we are going to take a look at why ‘chasing’ price around the charts is impractical, ineffective and why it will unravel you mentally.   The feeling that you might ‘miss the train’ Have you ever been sitting in front of your trading desk, watching the candlesticks tick higher and lower and then noticed a significant price event unfolding in front of your eyes? This event could be price breaking through an important support or resistance level, or maybe a trend line.   Whatever the situation, the price action makes your eyes light up like a Christmas tree. You whip out the trade order window as fast as you can. You proceed to enter a Forex trade at the ‘market price’ with a high level of urgency.     You’re in the trade, fuelled up on adrenaline, and on the edge of your seat watching the market go crazy as price breaks through the key point on the chart. You’re thinking to yourself, ‘oh this is going to be a massive breakout and land me the big trade I’ve been waiting for’.   Then all of a sudden the movement reverses and now you’re on the wrong side of the market.     Stop chasing your own tail An event like this could leave the un-educated trader banging their head on the keyboard, repeating ‘what went wrong?’ I know the feeling, but the market doesn’t work the way as everything else does in your everyday life. It operates in a more counterintuitive way, what you think might be the right way to do something is often the wrong way. You believe you enter a forex trade with military precision when really you’re as sloppy as a 2 year old with a crayon.   The markets are full of deception, emotions, traps and psychological torture that will absolutely rip you apart mentally if you’re mind isn’t ready for trading. Trying to trade the market uneducated, or unconditioned is like trying to navigate your way through a land mine field, blindfolded.   If a commercial airliner crashed without warning, investigators would act quickly taping off this accident scene to do some crime scene investigation. So let’s quarantine this type of aggressive trading and get a bit more of an understanding of why so many people churn and burn.     When you enter a Forex trade by chasing price, there is an obvious lack of planning in the trade execution. Throwing orders at the market on the back of impulsive price movements might seem like the right thing to do in the heat of the moment.   A decision making process like this is generally derived from ‘emotionally fuelled distorted logic’.   Secondly, the trader has allowed the market create a high level urgency within themselves. Inducing that feeling of ‘if you don’t jump in RIGHT NOW, you’re going to miss this move and never get another chance’. The high sense of urgency throws trader’s into ‘panic mode’ and the need to take action, superseding any rational thinking.   We’ve all been guilty of ‘chasing price’ at one stage. The market slapped us back in the face for it too. If you impulsively enter a Forex trade like this and it actually works out, you are at a high risk level of being a victim of the random reinforcement principle. You’re rewarded for the bad behaviour, which encourages you to do it more often. You won’t get the same result each time. It will be like a drug user  ‘chasing that first high’. It eventually unravels you completely as a trader.   If you really are passionate about trading and want to become a good trader, focus train of thought away from brute force attacks on the market. Projected your time toward proper risk management and logical trade execution.   Trade the right timeframe Timeframes are going to play a huge part in how successful you are as a trader. Generally when we first embrace Forex trading, we are easily lured into the lower timeframes. Other trades make promises that the lower timeframes offer ‘more trading opportunities’ and the ability to ‘make more money’. What they don’t tell you are the signals have much less value on the lower time frames as they do the with the higher timeframes.   Low timeframes – Lots of signals, but low quality. Plenty of breakout traps to be caught up in, and lots of market noise.   High timeframes – Less signals, but with low risk high reward profiles. Less breakout traps and more market stability and clarity.   Don’t fall into the idea of trading on the lower timeframes will make you more money or enter a Forex trade via lower quality signals. You’re taking trades that contain no real substance or value.   They don’t contain enough price action data, and expose you to a high level of risk. Intraday noise on the low timeframes can be so intense, trying to trade it is really just ‘chasing ghosts’.   On the 15 min chart below, we observed an aggressive 15 candle that closed below a support level. Something a lot of traders would have shorted into. It looks like a really large move and some uneducated traders would call this a ‘market crash’. Because we are on the 15 min chart the move looks bigger than it is. The total move is only about 30 pips…     Then this happens…     Just another typical breakout trap that occurs very often on these lower timeframes, like the 15 min chart. It’s hard to make sense of what’s going on here using these charts. Even with the best Forex trading strategy, you will still have to deal with the high level of noise and ‘false signals’ that plague these intraday charts.   Now let’s have a look at a typical scenario on the daily timeframe…     Market closes below support level and produced clear bearish breakout follow through. See how the daily chart just paints a much better picture of what’s going on in the markets. At first glance it’s easy to see this market has a dominant bearish trend momentum with very little noise.   That’s why we recommend to make the switch to the higher timeframes. The signals are lower risk, the market has more stability and clarity, and you have less chance of being caught up in any whipsaw type movements.   Create your own traps, Enter a Forex Trade Using limit and stop orders     There are generally two ways you can approach your trading. You can be like most traders and sit there in front of the computer screen, watching the market tick around all day patiently wait for a signal to develop. Or, you can identify signals by checking in on the markets from time to time, using pending orders to enter a Forex trade.   Pending orders are great for setting up your own ‘price trap’ to catch price exactly where you want and automatically enter the market for you. This saves you the mental punishment of staring at the charts, waiting for price to reach your desired entry point to pulling the trigger manually.   There are two types of pending order options, Limit and stop orders.   Stop orders are used to buy the market above current price, or sell below current price. Stop orders are used to catch breakout trades and we would typically use stop orders when setting up Inside Day and Indecision Candle breakout trades.   Limit orders are used to buy the market below current price, or sell above the current price. These are great for when you want to catch market retracements. We use limits orders all the time with our retracement entry method…   Here is a rejection trade I recently entered on the USDJPY daily chart. I wanted to take advantage of market retracements, so I used a ‘buy limit’ order to set up my price trap…     As anticipated a retracement did occur and my limit order was hit and automatically converted into a market order. Once you’re order is set, its hands free from there. This type of ‘fire and forget’ trading is something we practice a lot.     The price trap played out as anticipated and caught the retracement. This automatically converted my limit order into a market order. We use these type of entry / stop combo with our end of day trading strategies. It’s less work for us, and yields more results from the market.   Think of it this way, you’ve got a problem with a rat that you need to get removed from your house. You’re not going to run around shooting off a rifle at anything that moves hoping to randomly hit it.   Instead you set up a trap, bait it and let the rat get caught. The ‘set and forget’ approach here can be applied to the markets just as easily. Set up your price traps, let price come to you. Don’t chase the market around and enter a Forex trade at random price movements.   Avoid being caught in a trap yourself There are certain spots/conditions on the charts that are considered to be high risk zones to trade into, and should be avoided. One of these areas are weekly support and resistance levels, which are one of the major turning points in the market. If you’re fixated on the 15 min chart, you may not even be aware of these levels. Open up your weekly chart and map out these major termination points. You will be amazed at the price action you can take advantage of here.     Sometimes the market will create the illusion that a ‘breakout’ is occurring through these levels, drawing in unsuspecting traders into very bad positions. Weak traders enter a Forex trade from impulsive reactions triggered by events like this.     Once all the suckers are positioned in on the bad move, the market will pull back the curtain and reveal its true intentions…     The break through the weekly level was a classic bull trap and absolutely destroyed everyone who ‘jumped in’ with the buying frenzy. Avoid trading into these major turning points on the chart unless you have a damn good reason. The market lays down these traps to wash out weak traders.   Focus on trading away from these major turning points. Use strong reversal signals, or by waiting for a breakout then a retest from the other end.   Stop swinging your sword around like a mad man, set your trades up then walk away     Are you guilty of using a ‘machine gun’ mentality, and offloading a bunch of orders into the market hoping one of them hit a target.   If you really want to become a good, consistent trader, it’s time to move away from this savage mentality. Start trading with a cool, calm and collected approach. Plan out your trades more carefully, only load your weapon with one bullet. Pull the trigger and enter a Forex trade when the probabilities are in your favour. Make every shot count.   After you’ve entered a position, try to be at least involved with it as possible. How many times have you missed out on potential profits from a trade because you’ve emotionally intervened? Don’t stare at the charts, don’t stare at your trades. Fire off your order, walk away and go live your life.   If you think you you’ve been smothering the market too much and need to put some distance between you and the charts. But you still want to be an active trader at the same time. You may be interested in becoming a war room member where we do exactly that every day. We teach price action trading techniques that allow to you to have a minimalistic approach to trading. You can achieve good returns on investment, with plenty of time during the day to do things you like to do.   Stop by the war room info page, if you’re interested in more information on our War Room membership package. Cheers to your trading success.

Finding and trading long term movements is the primary goal of Forex trend traders. However once a trend is found, it can be difficult to time an exact entry point for market orders. Below we can see an example of the EURGBP currency pair trending 413 pips higher over the past three months. How can traders plan their potential market entries? Today we will identify opportunities to trade the EURGBP trend using the Rate of Change indicator.   The Rate of Change indicator (ROC) can be extremely useful in pinpointing entries in the Forex market. Used as an oscillator, the ROC displays the amount a currency has changed over a designated period of time in reference to a zero line. A reading above the zero line indicates that the market price of the currency is greater than the start of the ROC period. A reading below is the opposite and contends that price is trading lower compared to the first ROC period. It is important to note that ROC is an unbound oscillator similar to CCIand that the higher or lower a reading is, the greater the previous change in price.Taking the trend into consideration should always be primary when using ROC. Below we can see the EURGBP daily trend heading towards higher highs, meaning trend traders will look to buy the EURGBP. These new buy positions can be found using one of the most popular ROC signals, a zero line crossover. Traders in an uptrend will wait for the market to retrace, allowing the ROC oscillator to move below the zero line. As momentum returns with the trend buy signal may occur when ROC closes back above the zero line. Once a trade has been entered using ROC, risk can be managed by setting stops under a trendline or other area of support while setting up a positive risk/reward ratio.   Using the ROC indicator, my preference is to buy the EURGBP on a new zero line crossover near .8030. Stops should be set under trendline support near .8000. First targets can look for a minimum 60 pips profit for a 1:2 Risk/Reward ratio.Alternatives scenarios include the EURGBP breaking support and moving to lower lows.

Trading process consists of two major steps Order opening and Order closing. With the help of the forex technical analysis and the online forex broker, the journey of the trading process begins. The forex technical analysis gives the required information about the market and helps to decide on the trade. The online forex broker assists in completing the transaction.As stated earlier, trading process starts with Order opening. The term is self-explanatory; it is the first step towards completing the transaction. Order opening can happen live, when the person is online and in front of the device called as Market order. If the order opening is planned previously and set for a particular parameter for its execution wherein the person does not need to be in front of the device is called Pending Order. The pending order gets executed when the price reaches the desired price level.The Market orders opens positions in current time, while the pending order opens positions when certain conditions are set. The conditions could be Buy Limit, Buy Stop, Sell Limit or Sell stop.The importance of forex technical analysis is especially seen in the pending order, as the order is placed based on what you forecast over a period of time. If the forex technical analysis is well studied and understood, the chances of making a good transaction is high. The importance of the forex brokers comes in during the actual execution of the order; the online forex broker helps in reducing the chance of slippage.The process of trading is not complete without the closure of the order. Closing order again can be completed either by Stop Loss or Take Profit. Stop loss is as the term suggests a step taken to close the order when the trade is moving towards unprofitable positions. The stop loss happens immediately and automatically, without the requirement of the trader being physically available in front of the computer. The Take Profit step is given to complete the order when a particular price level is reached. Here again, the setting of the Take profit based on the forex technical analysis and an ability to predict the movement of the market.The Take profit is a limiting order which occurs automatically and as in the Stop Loss, there is no requirement for the trader to be available in front of the system.As the quote goes “something that is open can only be closed”, similarly only open market orders or pending orders can be closed. The Stop loss order is immediate order closure execution. As soon as the orders are closed, the account history will be updated with the last available order open as well as closed.As is the basis of the complete online forex trading process, the forex technical analysis is very important to decide the order opening as well as the order closing, the right prediction of the market along with efficient forex broker will invariable help in making a profit utilizing the trading process.


Post your comment