Mean Trade

Tuesday, November 24, 2009

ORB price extensions

I have been on an extended break from trading and am now in control of my schedule once again to analyze my chosen markets. Namely: GBP/JPY, GBP/USD, EUR/USD, USD/CAD and occasionally AUD/USD.

One of my favorite trade entries these days is a combination of the 1 hour ORB price level extensions coinciding with my CRB chart with VPOC levels. I know, an absurd amount of jargon. But really a very simple trade setup.

Here are the two annotated charts.

So the basic components are price extension fibs created from an opening range breakout (ORB), Market profile "Virgin Points of Control" or (VPOC) and the simulated price chart using Constant Range Bars with a setting of 20 pips (CRB).

Now, one question I am asking myself today is if a bias on the 1 hour chart creates more consistent returns using this setup or does it simply limit the amount of trades--which, in itself tends to reduce the sample set and improve returns over the short term.

The results of the trades for the past month on the EUR/USD with an hourly bias (created using a Volatility Pivot with an ATR setting of 7 periods; often referred to as the VP in my previous posts) are encouraging. But the question remains, does a bias improve my results? I will keep an eye on this over the coming weeks and report my findings.

Wednesday, September 16, 2009

Anatomy of an ORB bounce

Yesterday I bought at very nearly the low the of the day. I did this because of a price/ time relationship I have found to be extremely effective in entering the market. If you calculate the opening range and create a fibonacci extension over it, you will find prices tend to stop or even reverse once they hit these levels. Yesterday it was the 161 level. Often times this is the most probable level which price will bounce from as it is the first extension level from a breakout.

What adds even more probability to the bounce is the hourly pivot. Yesterday the hourly pivot was below the 161 fibo extension level. If price stays above this level you can almost guarantee a very swfit and profitable bounce. Which we got with a clean 90 pips possible profit.

*Note there is a second way to play the Opening Range Breakout. One which is even more profitable and immediate in its rewards. You wait for a very small opening range, such as today in the Euro (only 24 pips) and enter on the first close outside the range. I am reasonably confident today's move will be swift and substantial.