Combining Range Trading and Trend Trading — MT3 Forex Trader

I thought after my last few posts try to describe some information that might clarify a seemingly opposing technical commentary versus with systems you have to take every trade thats true unless you learn how to filter trades with rules for using discretion.

Can you see the edge?

Shall we trade in from the extremes, from levels of support and resistance or are those levels going to break and fat tail into a sustained trend

Can you see the trend?

Shall we buy and sell recent highs and lows, or counter trade with a pullback

Can we trade both?

Can we trade in from the edge and still go with the trend?

Confluence

Perhaps there is a time when the stars all align and the moon beam shines through the hole in the pyramid and the whole market constellation is in alignment that is the time when have the perfect trade.

It does happen quite a bit, you can range trade with the trend, you can trade levels, trend line rejections, trend lines, extremes all at the same time you just got to break it down into components master each one in its own right understand what it does..

It is either a Pure Trend Following System or a Mean Reversion System

You can mix them then you have a hybrid.

How can this information help.

Ok You are range trader your drawdown occurs when the trend forms or busts through historical levels of support or resistance

You are not picking the tops and bottoms as such but sometimes you can be so accurate to the novice that is what you are doing what you are actually doing is trying to enter as near to those points so you can place your technical stop in an insulated position away from any whip sawing market noise and volatility.

You buy or you short the move goes your way then it seems to halt at a line in the sand and then turns back and breaks the levels you get stopped out

This will happen what you have just been hit by is pullback and trend line rejection a trend continuation movement on a really strong trending day where the normal range is completely shattered by price you will merrily short the trending market and loose faith until the fuel from the move is burnt and then you sit on the side lines and miss the 23% or 50%retracement that is if you dont not have a system to prevent that mad trader but normal human behaviour to prevent this you can use the convergence of time and price as a friend to stop you over trading and shorting every new high, you can just use tight stops and a limited number of goes on top of timing you can have a system that plots the new high as a setup but wont signal a trade entry until some reversal rule has been followed

this could be a close below a moving average. It could be the same moving average that the trend has found its pullback and continuation support levels however you may find on some strong moves the distance between price and dynamic support too great -so you are entering too far away from the extremes to keep your risk down and your risk reward high

You could just learn that it is better to trade with the weight of the pack rather than against it

At extremes when a large object has stopped climbing it is weightless that can be hard to judge, when it turns and picks up speed you can climb on it and go with it but what if it bounces back, ok so you can use multiple trade entries or beak even strategies it is a case of researching and learningpeel off targets at defined technical areas and let others run

Letting winners run is a true cliché, but it only applies to trend trading with Mean Reversion you have a defined exit point at the mean. When you combine them you can do both but you have to trade with the trend understand that a pullback + a range trade is combining the best of both worlds you need to read the chart and look and find and identify this pattern.

Then you can apply it to you trading and go backtest and sim trade it.

You may find that when you have this pattern you can filter out signals and use discretion in other words apply a set of rules to a system framework that is not longer pure but watch ouy if you mix too many colours together you get a gray mess. You filer you winners and loosers

In reducing risk you reduce opportunity

Being too risky means you burnout before you bank the oppurtunity

Ok so apply money management to it dynamic position sizing based on a technical stop can seriously increase your winnings but for what is created something else gets a knockso careful with that too a gun pointed at your feet and not the target will cripple you.

Reading the Trend on a higher time frame

If you read the trend today you can start with a higher time frame the daily

and then zoom in ascertain where you would like to trade.

Look at the daily chart we are down, down, pullback and down, within a range between horizontal levels at the same time as trendinglets pick a easy — trade see the red arrow lots of sound reasons multiple reasons to go short

Levels

Trend

= Range Trading + Trend Trading

Zoom into a 60Min with MT Signals RSI + MT Signals MA Osc

Intaraday action and trend color coding shows us mean reversion hybrid trend trade

10Min

Open Line Rejection

Lower high

With Trend a pullback to the FXMAX on the 60Min

With daily trend — & price

987 Tick

Shows us the long trades were looking more like counter trades vs a pullback to a ma and trend line rejection to a new low