The Trading Zone » scalp trading

Trading in Narrow Ranges

Greg — Sun, 07 Nov 2010 22:41:52 +0000

I am often asked…. Ever since I began a career as a trading educator and as early as I can recall, traders have asked me how I intend to make money now that day trading is dead. This if course happens each and every time we have a dip in the daily volatility and trading ranges.

Every time we see the market retreat into a consolidation phase there are handfuls of traders who fear the worst and question their ability to earn a living as a trader.

Markets have and always will move from expansion to contraction and back to expansion. In fact in the earlier part of the decade when I began as a trading educator, the average daily trading range for the eMini SP’s was a paltry 9 points.

In late 2008 we were treated to ATR’s of over 25 points

If your trading strategy requires a trading range that is 90% of its historical high then you will find yourself asking me that very same question.

Any strategy that’s worth its weight has a defined set of rules telling the trader when to trade and when not to trade. In addition a superior trading strategy will provide the trader with a set of rules to identify narrow versus wide ranging days, and how to trade in each of those environments

Can I predict tomorrows trading range? No, I don’t believe anyone can, nor do I think it is a valid use of their time or study. Does our methodology accurately identify whether a market (that is already open) is likely to be range bound or trending? Absolutely.

Why is this important you may ask? Well just look at the last 9 out of 10 sessions on the eMini SP’s tight ranges, narrow brackets and extended Dead Zone/ No Trade Zone.

A trader must have the proper tools that allow them to earn in expansion as well as contracting markets.

If I threw in the towel every time the ATR dropped below 15 points I would have given up a long time ago. Fortunately there are setups for getting on board with a trend, and setups for fading a move in a range bound market. Knowing which type of market you are faced with is the key to success. The last thing you want is to fade a high in a defined Long Structured Market with a strong trend. Equivalently you don’t want to take a measly 5 tick scalp off when the structure indicates a much larger move.

So once again we find ourselves in an environment of declining average ranges, with the 10 day ATR at roughly 15 points, having come down steadily since the earlier part of the summer (see my chart)

Will I panic and enquire about the cost of opening a sandwich franchise to replace my income? Of course not. These are the normal ebb and flows of the market. Expansion to contraction… I will rely on the same tools I have been for close to 20 years , and employ that part of my trading strategy that is best equipped to conquer profits in this environment. I am not changing my strategy or my methods, rather the ones I use are already equipped to deal with the expansion contraction paradigm of the markets.

5×5 countdown

Greg — Tue, 01 Dec 2009 00:04:27 +0000

The Countdown begins

Hi fellow trader,

The 5X5 is almost ready for public release!

The 5X5 is a quick scalping setup that I’ve been working on for some time.
It’s being developed specifically to address the needs of smaller traders who want more frequent trade setups. (up to 3 trade setups per hour! Depending on market conditions)
This also makes it the ideal system for traders who only want to trade for a portion of the day

5 Tick Stops, 5 Tick Profit
Get in, Get Paid, Get Out!

Existing TTZ members:
The 5X5 will be added to your course materials as soon as the instructional videos are complete.
This is a huge benefit to existing TTZ members, as you benefit whenever we add more

Considering joining TTZ?
The time has never been better!
Our pricing structure will be changing in the New Year, so now is the time to get on board and take advantage of the 5×5 and other improvements.

Contact any member of the TTZ team to find out how you can participate!

Greg W
954-302-7494 / gregw@thetradingzone.com

Larry G
847-230-4204 / larry@thetradingzone.com

Mike B
612-424-9776 / mike@thetradingzone.com

Note: The 5 x 5 is set to be released 1^st wk of Jan 2010.
Get in today and benefit from 2009 pricing!

you can read more about the 5×5 here
http://thetradingzone.com/5×5-scalp-trade

5×5 scalp trade

Greg — Thu, 26 Nov 2009 15:41:48 +0000

TheTradingZone introduces the 5×5 Scalp Trade

Some new and exciting changes for 2010

Hi Folks,

As many have heard me say over the years, I have 1 motto that pushes me every day.
In a word that motto is ‘IMPROVE’

· Do better today than you did yesterday

· Learn 1 new thing that can improve your trading

· Deliver more than you promise

ALWAYS IMPROVING

Every year since becoming a trading educator, I sit down around this time of year and make a list of all the comments, criticisms, requests etc.. that have been asked of me over the last 12 months, I then attempt to improve our products and services accordingly.

Over the last year there has been one comment that has dominated all others.
“How can a smaller trader (1-2 lots) possibly hold a big trade when the markets can get so choppy?”

THE ISSUE AT HAND
While it is true that the power of Market Profile cannot be denied, and our methodology has demonstrated time and time again how to capture the big rotation of the trading day, sometimes grabbing 90 plus % of the day’s range….
It is also true that smaller traders may not have the ability to hold the trade and may be more inclined to take a smaller profit.

It is also true, in my own opinion that the last 8-9 months the E-mini SP’s have been somewhat more ‘noisy’ than I have seen in prior years

In addition, using a scale out trade management style, a smaller trader who does not, or cannot participate in the larger moves will need a very high percentage of wins in order to compensate for full stops

THE SOLUTION
The solution is therefore to take a negative and turn it into a positive, let me explain;

Staying with the assertion that in fact the markets are noisier / choppier than they were previously means that when the price hits a resistance level for example it is more likely to pull back than push through. Trading the breaks as we often do, we would expect our entry to go against us by 2-3 ticks before rallying through the resistance level.
With the increased noise however , that pullback is more like 8-10 ticks, which means using a much wider stop than we are accustom to…

OR……

INTRODUCING THE 5 X 5
The 5 By 5 Trade addresses all of these issues in an incredibly easy to use setup, let me explain

The term 5 By 5 refers to a quick scalp that uses a 5 tick target and a 5 tick stop

Let’s Trade Inside The Noise!…
What we are witnessing are 3 minute candles that are 10 ticks wide!
By accelerating our charts, and relying on the same TTZ core principles of Market Structure + Price Action, we can trade ‘inside’ the candle and grab some quick profits.

IDEAL FOR SMALLER TRADERS
This quick 5 X 5 is ideal for smaller traders for so many reasons:
1. More trade setups during the day (as many as 3-4 per hour, or up to 20 a day)
2. No Scaling out. The math is easy, all in all out for 5 ticks.
3. Less dependence on trading with the trend
4. Automate your trade management

DEMONSTRATED LIVE
At the recent Las Vegas Traders Expo, I demonstrated this setup by taking a live trade in my own account. I approached the trade as a small lot trader and took 5 ticks out of the market on 2 contracts +$125.

HOW IS IT DONE
The 5 X 5 as mentioned is built on the same core principles of TTZ.
1. Trend vs. Range determination
2. Trend trades only in trending markets
3. Fade and trend trades in range bound markets
4. Trade with MP Market Profile Structure
5. Use Order Flow/ Price Action for execution
While our 3 minute setups considers all of the above equally, the 5 X 5 places more weight on #5 . Use Order Flow/ Price Action for execution

WHAT’S NEXT
There is a big difference between a concept and a system. Trading ideas or concepts while they form the basis for building a system, are NOT a system. A trading system must be:
1. Clear
2. Concise
3.Objective
4.Easy to Identify
5. Easy to Execute

As an 18 veteran of the trading industry I can assure you that far too many traders attempt to trade successfully using ideas, or concepts before they have been wrapped into a well defined Method or System.

I do not make that error. As with our 3 minute TTZ entries, the 5 x 5 will be a set of clearly defined rules and conditions for entry, exit and management.

Th5 5×5 Scalp Trade Self Contained trading method is now included in the Home Study Course.

HOW DOES THIS AFFECT THE TTZ CHAT ROOM?
It doesn’t change our focus at all.
The 5 x 5 will be a self contained scalping setup that beyond the introduction and explanation on how to trade it, should not require any ongoing hand holding. Like I said the setup must be clear and objective.
The focus of the chat room, has always been, and will continue to be focused on understanding Market Profile, Determining Market Structure, and finding TTZ 3 minute trades that setup and offer the potential of BIG MOVES. That is the power of Market Profile and we will continue to teach, explain and demonstrate TTZ on that basis

I truly believe that TTZ offers something for every trader, now more than ever!
Newer traders learn the fundamentals of technical analysis, and placing trades.
Experienced traders, discover the Power of Market Profile, and locating BIG Winners.
Smaller scalp traders can now find multiple opportunities throughout t the day for 5 tick winners

As always, I am committed to improving your trading and mine.
If you’ve been a member of TTZ for some time you have seen how we always strive to improve.

On this Thanksgiving day I say;
THANK YOU!
to all our members for your incredible dedication and support.
THANK YOU for keeping me motivated to:
Do better today than I did yesterday
Learn 1 new thing that can improve my trading
Deliver more than I promise

Greg