Doji's Range Bar Trading

[dojirock]

I would like to start a new thread, in regards to rangebar trading. I personally perfer range bar trading. I am more of a mechanical trader with a hint of discrestionary tendencies. Range bars are very much visual which enables me to see price movement more easily.

For those who might not know what range bar trading is, let me try to explain as I know them. Price constantly moves up and down on every time frame, every day. Range bars are formed when price moves a certain span in price. An example would be, if we want range bars that are set to 20, they would be drawn and every bar would be the same size of 20 pips if you will from high to low. Time is not a factor in range bar trading.

So if price is at 1.3923, price moves either up or down. That bar will not complete until price has moved 20 pips from that price, 1.3943 up or 1.3903 down. Price can take 4 hours to do this or just seconds to move 20 pips. When a bar has reached a 20 pip spread from high to low or low to high a new bar is then formed. AsThe result is pure price movement.

When the market opens tonight I will post some range bar charts as an example. Also I will share some ideas that I have and use with rangebar trading for those that are interested.

Dojirock

[tmanbone]

A little history. Good luck with your thread. Enjoy. Thanks,

Nicolellis Range Bars were conceived in 1995 by a Brazilian broker and trader - Vicente M. Nicolellis Jr.
During 13 years running a trading desk in Sao Paulo, where local markets tend to be volatile, he wrestled with the problem of how to handle this volatility and its variability. Finally he concluded that the most promising approach would be to eliminate time from the equation, and just concentrate on price.
After all it is price that you trade (rather than time, unless it is an options market).
Essentially this reverts to the early days of Technical Analysis, and the use of Point an Figure Charts which just record price changes.
By using a constant range, ex. 10, and opening a new bar once that range is covered, one can also apply modern concepts of indicators, which are bar based.
In 1996 the concept was computerized, which meant that many more markets could be studied.
Experience in the last 8 years has shown that Nicolellis Range Bars are particularly good at focusing on and clarifying movement.
The way in which a long meandering, horizontal "congestion" is condensed into a bar or two, concentrates attention on the essential underlying price movement while eliminating unnecessary "clutter" and "noise".
This also makes the use of Trendlines easier.

[Jalarupa]

Doji - Could you post your indicator that draws the bars as well>?

[genlogins]

I have inserted some indicator that draws Point an Figure Charts, but it takes a lot of RAM from PC. Lives no rest to CPU and GPU.

I took back to simple, but if some one has a very simple indicator that does that without loads of RAM, please post.

Gen

[dojirock]

Thank you T for adding some history on the range bars!

I do have an indicator that I will attach, it is a generic range bar indicator, the dating of the bars wont be correct, but it does draw the bars correctly. The rangebar EA I use is a commercial bought version, thus I cant give it out.

Overtime I have come to realize the more indicators on the chart the worse I trade. Simplicity is the key with a great money management system.

I will admit I have not made thousands of dollars yet in this method, but plan too. I have started with 25.00 micro account and made it to 997.00
.10 cents a pip, one trade at a time. My goal was 1000.00 but the excitement and anxiety got to me... I withdrew 800.00 and took my family on a vacation!

So now I start again, with an account of 250.00 on micros, and plan to let it build to 2k before I withdraw again. I will post my charts as I gain and lose. I will only do this because it is a level of accountability for me to stick to the basics, take only trades I believe in and exit when it tells me to. I love to trade and sometimes I have taken trades just to be in the market.

dojirock

[dojirock]

This chart is a 20 Range bar chart. Each bar is made up of 20 pips from low to high or high to low. Look at the simplicity, less noise that time charts can cause.

Could you trade this? Just like it is?

dojirock

[dojirock]

What about this chart? Does it look easier to trade? Maybe to the longer term trader? What a bout a scalper? How would you trade this? Maybe you know how to trade, its the money management that you dont have a grasp on?

Just some thoughts.
These are things some of my mentors, in its simplistic form, was asked of me when I started...Trading does not have to be difficult.

dojirock

[trueblueTEX]

Hey doji,

what is the blue line?

[The_Snowman]

Hello to all, I am definitely joining and following this thread ! thanks for starting it, now here are some basics, sort of a FAQ

For those interested, more reading here, on all everything you can base a chart on -

http://www.linnsoft.com/tutorials/periodicities.htm

Time Driven Periodicities

* Second Bars Each bar reflects trading activity during a user-specified number of seconds.
* Minute Bars Each bar reflects trading activity during a user-specified number of minutes.
* Daily Each bar reflects trading activity during one day.
* Weekly Each bar reflects trading activity during one week.
* Monthly Each bar reflects trading activity during one month.

Volume Driven Periodicities

* Tick Each point/dot reflects one trade/tick.
* Tick Bars Each bar reflects price action over a user-specified number of trades/ticks.
* Volume Bars Each bar reflects price action over a user-specified volume.

Price Driven Periodicities

* Range Bars Each bar has the same high/low range.
* Change Bars Each bar has the same open/close change.
* Point and Figure Each bar is built and displayed based on Point and Figure logic.
* Renko Each bar is built and displayed based on Renko logic.

These periodicities can be grouped into 3 categories: time driven, volume driven, and price driven.

Time Driven Periodicities - Second Bars, Minute Bars, Daily, Weekly, and Monthly

Time driven periodicities are those in which each bar is composed of the price activity that occurred during a specific amount of time. The open represents the first trade that occurred during that time period, while the close represents the last trade. In these periodicity, the volume and price range of each bar can vary greatly, while the time period is kept constant.

Volume Driven Periodicities - Tick, Tick Bars, Volume Bars

Volume driven periodicities are those in which each bar is composed of the price activity that occurred during the trading of a specific amount of volume or number of trades (ticks). In these periodicities, the price range and time of each bar can vary greatly, while the volume is kept constant.

Price Driven Periodicities - Range Bars, Change Bars, Point and Figure, Renko

Price driven periodicities are those in which each bar is composed of the price action that occurred during a given movement in price. That price movement can be expressed as a given high low range (Range Bars) or a given change from open to close (Change Bars). For Renko and Point and Figure periodicities, price must retrace a given amount in order to complete a bar. In these periodicities, the volume and time of each bar can vary greatly, while the price movement of each bar is kept essentially constant.

[adaseb]

I don't know if you guys know this but Ninjatrader can easily plot range bars.


Also tick bars, second bar, volume bar, etc.