Using Range Bar and Volume Charts for Scalping 7-20-2016
Posted By:- Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
1. Market Commentary
2. Futures Support and Resistance Levels – S&P, Nasdaq, Dow Jones, Russell 2000, Dollar Index
3. Commodities Support and Resistance Levels – Gold, Euro, Crude Oil, T-Bonds
4. Commodities Support and Resistance Levels – Corn, Wheat, Beans, Silver
5. Futures Economic Reports for Wedneday July 20, 2016
Why I Like to Use Tick and Volume Charts for Scalping
Today, I decided to touch more on an educational feature rather than provide a certain market outlook.
Many of my clients and blog readers know that when it comes to short-term trading I am a fan of using volume charts, tick charts, range bar charts and Renko charts rather than the traditional time charts like the 1 minutes, 5 minutes etc.
My rule of thumb is that if you as a trader who makes decisions based on charts that are less than 15 minutes time frame, it may be worth your time to research, back test and do some homework as to potentially using other type of charts like volume charts, Range charts etc.
Volume charts will draw a new bar once a user defined number of contracts traded. An example is the mini SP 10,000 volume chart which will draw a new bar once 10,000 contracts are traded.
Range bar charts will draw new charts once price action has exceeded a user’s pre-defined price or ticks range. An example might be an 18 ticks range bar chart on crude oil.
While volume charts rely ONLY on volume, the range bar charts rely ONLY on price action.
Their main advantage over traditional time charts is twofold in my opinion:
If the market is moving fast, reports have come out or there is heavy volume in the market, the traditional 5 minute chart will need 5 minutes to complete the next bar before it provides you with a signal…if you have day traded futures before you know what 5 minutes can do to these markets….The volume charts or range bar charts in this case will complete the bars MUCH faster because there is strong price action and strong volume and will be able to provide a signal faster than the time charts.
On the flip side, there are times when the market is dead…low volume, sideways, choppy action. If you are using the 3 minute chart and a moving avg. cross over, you may get a signal simply because time has passed and the moving averages crossed even though the market is pretty dead….If you are using a volume chart and the market is slow…it will take a while for the bars to complete and hence it may filter out some “noise” in the market.
Here is an example of mini SP500 futures chart from today ( 6 ticks range bar chart) along with a trading model that trades it.
Would you like to have access to the DIAMOND and TOPAZ and 5T ALGOs as shown above
and be able to apply for any market and any time frame on your own PC ? You can now have a three weeks free trial where the ALGO is enabled along with few studies for your own sierra/ ATcharts. The trial comes with a 23 page PDF booklet which explains the concepts, risks and methodology in more details.
To start your free 3 weeks trial, please send me an email with the following information:
- Are you a client of Cannon Trading?
- Are you currently trading futures?
- Charting software you use?
- If you use sierra or ATcharts, please let me know the user name so I can enable you
- Markets you currently trading?
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.
ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NO INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS
Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.
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|Contract Sept. 2016||SP500||Nasdaq100||Dow Jones||Mini Russell||Dollar Index|
|Contract||Aug. Gold||Sept. Silver||Sept. Crude Oil||Sept. Bonds||Sept. Euro|
|Resistance 3||1346.4||20.37||47.10||173 25/32||1.1175|
|Resistance 2||1341.0||20.25||46.74||173 8/32||1.1141|
|Resistance 1||1336.7||20.11||46.09||172 25/32||1.1093|
|Support 1||1327.0||19.86||45.08||171 25/32||1.1011|
|Support 2||1321.6||19.74||44.72||171 8/32||1.0977|
|Support 3||1317.3||19.60||44.07||170 25/32||1.0929|
|Contract||Dec.Corn||Sept. Wheat||Nov. Beans||Dec. SoyMeal||Aug. Nat Gas|
German PPI m/m
Average Earnings Index 3m/y
Claimant Count Change
Crude Oil Inventories