Wide Range Bodies or 'big' candles

[brownsfan019]

Here's a WRB chart from today with some nice exits.

This is an ES chart with a 15,000 VBC setting. As I said in the previous post, WRB's are more obvious on a larger VBC setting. So, my suggestion at this point for anyone interested in WRB's and using a VBC chart is to consider a 'higher' VBC setting. At least what I would consider a higher setting. I've been looking at different settings for the VBC and there's a fine line between helping to keep the noise down and to having too little going on in my opinion.

[brownsfan019]

Pivot - you still out there? :p

Update: Considering how good the WRB's can be for exiting and since they are not as noticeable on a constant VBC chart, I have a 5 minute chart up during the day for the ES. If anyone out there is still reading this thread, I'll throw some screenshots up, but if not, no point in wasting time.

So, anyone - Pivot or not - if you like this thread and like watching my progress on WRB's, let me know and I'll continue with updates. I just don't want to take screenshots, annotate them, post them here with explanations if I'm the only one looking at them!

[Anonymous]

Sounds interesting. Please tell me (us) more.

[brownsfan019]

Pivot,
Glad to see you are still checking this thread out!

Here's a chart from this morning from an actual trade. This chart is a 5 minute ES chart and as you can see, if you get long into the move near the open, three WRB's appear to provide nice exits.

The net on this trade was +4.83 ES pts/contract.

[brownsfan019]

So here's the million dollar question pertaining to WRB's:

When exiting, do you wait for the WRB to close or exit as a WRB is being formed. That is the big question here and I refer to the decision as my "Blackjack Strategy" which I mentioned in another thread and may post a better explanation here as well. In a nutshell, you must do the same each and every time.

My current position on this question is to wait for the close. It's more mechanical and no 2nd guessing involved. Yes, some WRB's actually close lower or not a WRB at all. It will happen. But when a 4 pt WRB appears and you take 1.5 or 2, you just left a lot of money on the table.

What do you think Pivot? Maybe Mark can share as well if he stops by.

[Anonymous]

Great stuff. Really appreciate it, please keep it coming.

You know that I like the trailing stop method, but let's talk about the options you have mentioned.

First, it is pretty clear that regardless of method employed, a situation (more than one) will appear where the opposite method would have been more optimal. That may seem like a "captain obvious" statement and many would say that is why trading is so hard.....

I do not want to speak for Mark, but I believe he would say that an understanding of the price action would determine which method is best at any particular time. That is, since every situation differs, the more one understands the individual situation, the better each situation can be individually managed.

Now I have not tried this and am really just "thinking aloud " here, but what about a combination like this? Start out with exiting on the close of the WRB as you have previously mentioned. However in special cases exit on the appearance of a WRB if it is say, greater than 3 x's the average WRB on the chart. The special case IS the size of the WRB. But you might note that the size of certain WRBs are related to news events and other types of events.

Therefore, you could still have the "Blackjack" idea. BTW would love to hear more about this, where can I find It?

[brownsfan019]

Originally Posted by PivotProfiler Therefore, you could still have the "Blackjack" idea. BTW would love to hear more about this, where can I find It?

http://www.traderslaboratory.com/for...html#post10339

[brownsfan019]

Originally Posted by PivotProfiler Great stuff. Really appreciate it, please keep it coming. You know that I like the trailing stop method, but let's talk about the options you have mentioned. First, it is pretty clear that regardless of method employed, a situation (more than one) will appear where the opposite method would have been more optimal. That may seem like a "captain obvious" statement and many would say that is why trading is so hard..... I do not want to speak for Mark, but I believe he would say that an understanding of the price action would determine which method is best at any particular time. That is, since every situation differs, the more one understands the individual situation, the better each situation can be individually managed. Now I have not tried this and am really just "thinking aloud " here, but what about a combination like this? Start out with exiting on the close of the WRB as you have previously mentioned. However in special cases exit on the appearance of a WRB if it is say, greater than 3 x's the average WRB on the chart. The special case IS the size of the WRB. But you might note that the size of certain WRBs are related to news events and other types of events.

Pivot - you are right, there's probably many different combinations of using the WRB to exit that may or may not work better than exiting at the close or during the formation. As you said, either way looks great in hindsight.

I like the close the best simply b/c it's mechanical and there's no 2nd guessing yourself, which I am great at doing. I know we could analyze the AM vs. Lunch vs. PM vs. Econ News vs. Non-Econ News etc. etc. to see where the best might have been. To be honest, I think in the end, it's simply a matter of doing the same thing, each and every time, like I attempted to explain in the blackjack thread.

I think that whether it's trading, blackjack, etc. to randomly pick your entries, exits, etc. is a loser's game and the 'house' will always win in the end. I really don't see how someone could randomly choose their entries, exits, etc and think that's a good way to make money.

[brownsfan019]

Update here on the WRB front - as the charts I've posted have shown, when there is a WRB, it should at the very least get your attention. How you interrupt that info is up to you.

There is one serious flaw with WRB's and using them for exits however - when they don't show up! :mad: In other words, if you have a trade that moves in your direction but a WRB does not appear, the question becomes what to do. That has been causing some frustration on my end. For example, I had an ES short on 5/4/07 that moved approx 4 pts in my direction. One WRB appeared that provided a good exit. Since I am trading multiple lots however, I was looking to exit at different levels and all that showed up was one WRB. Of course the argument is to simply exit on the first WRB you see. The rebuttal to that being it's not uncommon to see more than WRB appear.

So then it's simply a matter of taking most/all off at a certain point (however you determine that) or try to catch the bigger moves (when they are there).

[Anonymous]

Originally Posted by NihabaAshi ...There's a difference between a Wide Range Bar and a Wide Range Body although both are called WRB. The Wide Range Bar is a term associated with Bar charts and represents the price area between the High and Low. In contrast, Wide Range Body is a term associated with Candlestick charts and represents the price area between the Close and Open. The subjectivity from one trader to the next is how they define a WRB in relationship to the prior price action. My own personal preference is that a WRB has a body with a price area > body price area of each of the most recent prior three intervals. Therefore, base upon my above definition, I'm obviously using candlestick charts. That personal definition for me is not subjective. Yes, you can easily code a WRB to that they are either color coded or whatever with programs like Tradestation. Yet, after a few weeks of looking at them, you really don't need any code to tell you if something is a WRB or not unless your doing some sort'uv trend strength analysis. In the past, I found the counting of WRB's as a great tool for trend strength analysis. However, I've been using them since the 80's and don't need a computer code to count for me because I can quickly count them via visual inspection of the trend. When I first started trading and studying the markets, I called them Wide Range Bars until the arrival of candlestick charting software. That's when I began calling them Wide Range Bodies especially when I became more of a price action only trader. Last of all, the study of WRB's (WRB Analysis) is basically volatility analysis as it interprets changes in supply/demand. Mark (a.k.a. NihabaAshi) Japanese Candlestick term

From another site but wisdom is wisdom. Mark, we all wish you would impart more of it here.

P.S. BrownsFan. While the definition of a WRB can be hard coded, it still can be visual. WRBs appear more than you think when you use the basic definition above.