TheRumpledOne wrote:Ok Ric, please tell me more about how you filter for trending vs range-bound price action.
If I understand, I could write an indicator..
That's a difficult question to answer specifically, since I develop a trading strategy for a targeted single futures market, and haven't looked at the price action of the various forex pairs that you're trading. I would also add, that I don't know if a "one-size fits all" indicator will work, given the various "personalities" of multiple markets.
However, I'll give some general ideas of ways I've filtered in the past for trend vs range. And as mentioned in my earlier post, if I were doing the work on this filter, it would be conducted and used in connection with optimized TP/SL (R/R), so they are interrelated. That's another reason, why I don't know if generating an isolated, general trend vs range indicator for multiple markets would work. (As I write this, this type of approach sounds like Welles Wilder's ADX indicator, which I've never found to be of any value for my style of trading).
But back to trend vs. range as a standalone. I would look at backtesting results for an ATR threshold that gives an optimized expectancy. Obviously the variables that need to be considered are ATR period and trading timeframe.
Another method I've used is an HMA slope angle filter. When flat, or nearly flat - no trades. Look at optimization, utilizing a minimum slope angle threshold before a signal is valid. It's been my experience that HMA is significantly better for this, than any other MA.
For deciding whether to trade at all on a specific day, I look at the globex session range immediately prior to pit open. I've found a consistent threshold that alerts me when CL expectancy is that of a range bound day session. I don't know how this type of approach would translate to forex, since there is overlap of various world-wide markets "regular" trading hours that affect the ranges of corresponding currencies.
Hope you find something in this that seeds an idea for a great indicator.
(Disclaimer - This post is for educational purposes only. Always consult a licensed investment professional before taking any trade. Any trade you take is at your own risk.)