Showing posts with label TTR. Show all posts
Showing posts with label TTR. Show all posts

Friday, March 16, 2012

First bar: doji - Tight days.


A doji first bar can give a diverse range of days from tight ranges such as today to large trend days and wide trading ranges.

A tight day such as today is extremely dangerous to trade if your first target is 2 points or larger. Halving your target is poor risk management since you cannot practically also halve your risk. So a 6t risk with a 4t profit potential requires far higher probability of success and even then the rewards are usually not worth the pursuit.

Any trend attempt that rapidly degrades into doji bars (b16-20) should always raise suspicions of poor trading action and you should sit out until the bars become normal or price breaks out. Most bars after the initial move were in a 3 point range and the probability of success of price action entries is extremely low so its best to sit out.

Thursday, February 2, 2012

Horizontal Tight trading range (TTR) or Dojistan


A prolonged horizontal barb wire pattern is nearly impossible to trade and can be labeled dojistan. Attempting to trade dojistan using stop entries will invariably lead to failures.

Anticipating dojistan is simple. The moment you see bars getting smaller than 1 point and when many of them are dojis, you should be cautious. Bars that are two ticks tall such as b55 are early warnings that indicate possible dojistan. Note that any bar thats 4t or smaller should be treated like a doji while in dojistan and is usually not a setup bar (b59, 62).

The only possible approach to trading the dojistan is to fade trend bar breakouts. By definition, dojistan is a tight trading range. Since most breakouts of trading ranges fail, you could simply sell the close of a trend breakout bar with a stop 1t beyond it. So for example, you could short b61 close and b74 close on limit.

The best approach however, is to do nothing. The one or two points you could make in a dojistan are not usually worth the risk and the energy you would need to put into it. Better price action is coming shortly, so just wait for it.