catching a wide range bar - swing or day trading

fl_tr

Newbie
4 0
catching a wide range entry bar - swing or day trading

I've been doing quite a bit of backtesting lately on daily charts as training and making quite a bit of notes. One corellation I'm still trying to get a grip on is how to get a wide range bar (a bar that is 1.5 to 2 times larger then a typical bar) at the entry.

In general what I've found is that at major daily market pivots, the stocks that start a new swing up from a WRB (wide-range bar) typically have stonger and more reliable swings vs. those which do not have WRB's. Thus, the profit potential is greater and chances of a stop-out are considerably less.

It also gives a greater piece of mind at the start when my lift off bar is a WRB and
I can place a BE stop once it is comlete or at the very latest on the next bar.

So far what I have so far is the following to maximize the chances of getitng into a trade that starts off of a WRB:

1. The weekly chart has to be starting a swing up of it's own, and the daily pivot being considered is in the beginning of the weekly swing up.

2. The volume on the last swing has to have been substantial, indicating that smart traders are buying that particular dip, and the chances are high that the same ones will be here again at this dip to add to the position.

3. Last swing up was cleaner and stronger than other stocks.

The combination above helps, but it does not get me as many WRB entries as I'd like to have.

Has anyone noticed something I'm missing? I'd appreciate any suggestions/ideas.

I recall one of Ron Wagner's DVD's (Ron used to work at Pristine). He mentioned that majority of his trades have a wide range lift-up bar that gets him in, but he did not go into detail of what he looks for. Anyone know?

By the way, if you day trade, would love to hear from you as well on this topic. Charts patterns are very smiliar on the daily and intraday, so if you've noticed something intraday that would help, would love to hear back.

Thank you.
 
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tomorton

Legendary member
7,369 995
This is worthwhile study and you might want to look at the different types of WRB.

Examples (for long positions) would include

key reversal - WRB in downtrend closes above high of previous day. Buy at the close of the WRB: option to use use low of previous day as stop.

whiplash - price opens with gap down below low of previous day but rallies to close higher than the open and above 50% of the daily range: this might become a WRB but even if it doesn't break out above the high of the previous day, the opening gap down and strong price action within the session could make this a more significant reversal signal than merely price trading below the previous day and price trading above.

Standard teaching re uses of WRBs often carries an in-built disadvantage in that the opposite extreme of the WRB range is used as the stop. This is likely to be far from entry, increasing risk if you use this as a stop level.
 

fl_tr

Newbie
4 0
Tom, thanks for your comments. The whiplash helps and I have noticed that it does produce more reliable reversals, - I'll have to take a look at it in more detail as far as WRB development possibility.

Just so we are on the same page: what I'm looking for are setups that at reversal would produce a WRB that would get me in. Whiplash would be one such potential pattern. So if I use yesterday's high penetration to enter a long trade today, I'm looking to find a patern combination that would produce the WRB today; thus, assuming WRB opens in the middle of yeterday's range or so, my entry would be in the bottom 30% of it, before it actually becomes a WRB. The goal is to get into it in the bottom 30% to 40% of the WRB, so the the WRB immediately lifts you up into positive territory (as opposed to entering after the WRB already is developed). My stop would be the low of yesterday, or today, what ever is lower, assuming low today is not significantly lower then yesterday.

What I have found is that in general these are poduced due to very eager buying on longer timeframes or at start of last up-swing. So, when there's a dip on the daily chart, the same "eager buyers" step in and buy a lot more now that the issue can be bought at a lower price.

Does anyone else have more ideas?
 
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glyder

Established member
753 93
Maybe you can enter the trade on a pull back the following day?

Thing is you never know the tradet has momentum until the bar is later broken.
So it kind of increases uncertainty whilst decreasing risk.

If you see what i mean?
 

fl_tr

Newbie
4 0
You're right, you don't. Entering on a pullback is not a bad idea. Unfortunately more often than not if the pivot is coinsident with a strong market pivot, strong stocks that lift off with a WRB take off and never look back. These are the very ones I want.
 
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