What percent of the time do you think that currencies are range bound?

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mrsoul

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What percent of the time do you think currencies are in a discernable range and what percent directional.

I wonder if this answer is constant over say a period of 20 years and if it is the same on any time-frame.

If currencies are significantly more directional than range-bound, then a method can be applied to exploit this.

What are your thoughts?
 
overall I would think market are more often rangebound than trending, but then if you drop down a TF you may find a trend.
 
The moment you expect markets to conform to any preconcieved notions you are making a mistake
 
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gamma said:
The moment you expect markets to conform to any preconcieved notions you are making a mistake
Click to expand...

VERY true.

Markets are like Quantum physics eh hehe...

the moment you start observing an object it changes it's behaviour.
 
It's interesting, the answer 'always and never' was exactly my intuitive reaction.

The fact is, it's a meaningless question without giving specific parameters, not just of time frame but of duration. Even within one time frame one person may be looking at the action as a range and another person may be looking at it as a trend depending on how far back they are looking and what perspective they are coming from.

I have a question for the thread starter. Imagining for a moment that you stick to one timeframe and duration using a 'box' as CV suggests, and find that the market trends 80% of the time and ranges 20% of the time, according to your parameters. What do you propose to do with that information and how would it help you?
 
This is a difficult question to answer and it can depend on which currency you are trading and in what timeframe. The EUR/USD was trending for around 5 years in one of its timeframes before it then changed.

As a rule of thumb it is around 70% range bound and 30% trending for intra-day trading in my view.


Paul
 
virtuos0 said:
It's interesting, the answer 'always and never' was exactly my intuitive reaction.

The fact is, it's a meaningless question without giving specific parameters, not just of time frame but of duration. Even within one time frame one person may be looking at the action as a range and another person may be looking at it as a trend depending on how far back they are looking and what perspective they are coming from.

I have a question for the thread starter. Imagining for a moment that you stick to one timeframe and duration using a 'box' as CV suggests, and find that the market trends 80% of the time and ranges 20% of the time, according to your parameters. What do you propose to do with that information and how would it help you?
Click to expand...


This would be very useful info. to have.
For one, if you knew this you could buy new highs and sell new lows with some confidence; plus there are a myriad strategies you could apply using this information.
 
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Trader333 said:
This is a difficult question to answer and it can depend on which currency you are trading and in what timeframe. The EUR/USD was trending for around 5 years in one of its timeframes before it then changed.

As a rule of thumb it is around 70% range bound and 30% trending for intra-day trading in my view.


Paul
Click to expand...

Paul,

If the market ranges 70% of the time, do you think a strategy could be devised by selling new highs and buying new lows?
If the market ranges 70% of the time, perhaps such a strategy has some merit.
 
mrsoul said:
This would be very useful info. to have.
For one, if yoy knew this you could buy new highs and sell new lows with some confidence; plus there are a myriad strategies you could apply using this information.
Click to expand...
MrSoul

Really you should be answering your own question. Any one of us could quote some ratio for non-trending/trending behaviour, but you won't know whether any of our answers are correct. The chances are someone will quote the usual 80/20 rule, which may or may not be right, but unless you have verified it by personal observation then the figure is worthless.

As several have pointed out the behaviour will differ for each timeframe, so that also needs to be considered.

As virtuoso pointed out you need to consider how you plan to use the data within a strategy and what your chosen timeframes are for providing direction, trending/non-trending behaviour and trade entry/exit signals.

At this point you need to examine the charts either manually or using a program to identify the behaviour. The latter will require precise definitions of what is a trend and what is not a trend. Various indicators have been created that attempt to do this, if you choose to use them.

In my opinion it is irrelevant what the ratio is between non-trending and trending behaviour, because it is simply a matter of how you identify the two and what is an appropriate strategy for each. You then apply the appropriate strategy under the appropriate market conditions. There is no reason why you could not trade both types of behaviour.

So in my opinion is is up to you now to do the hard graft with the charts e.g following the suggestion of Counter_Violent to come up with a tradeable strategy

Charlton
 
Charlton said:
MrSoul

Really you should be answering your own question. Any one of us could quote some ratio for non-trending/trending behaviour, but you won't know whether any of our answers are correct. The chances are someone will quote the usual 80/20 rule, which may or may not be right, but unless you have verified it by personal observation then the figure is worthless.

As several have pointed out the behaviour will differ for each timeframe, so that also needs to be considered.

As virtuoso pointed out you need to consider how you plan to use the data within a strategy and what your chosen timeframes are for providing direction, trending/non-trending behaviour and trade entry/exit signals.

At this point you need to examine the charts either manually or using a program to identify the behaviour. The latter will require precise definitions of what is a trend and what is not a trend. Various indicators have been created that attempt to do this, if you choose to use them.

In my opinion it is irrelevant what the ratio is between non-trending and trending behaviour, because it is simply a matter of how you identify the two and what is an appropriate strategy for each. You then apply the appropriate strategy under the appropriate market conditions. There is no reason why you could not trade both types of behaviour.

So in my opinion is is up to you now to do the hard graft with the charts e.g following the suggestion of Counter_Violent to come up with a tradeable strategy

Charlton
Click to expand...


I agree that to arrive at an accurate ratio one would have to do some rigorous testing.
However, I disagree that this information would not be useful

For example, if you knew that a market was range bound 70% of the time, it would seem like one could devise a strategy to exploit these statistics- like selling new highs and buying new lows, etc.

Does anyone care to develop such a strategy on this thread?
Afterall, if the market ranges 70% of the time, it seems like there is
money to be made if done properly.
If there is an interest in developing such a strategy, I have few ideas I will throw out .

By the way, how do you determine if a market is going to stay in a range or remain directional?
 
I fail to see what advantage this gives you. A good trader will identify what mood the market is in, and where price is flowing, in the here and now. So whether you sit down to trade armed with historical knowledge, or with no historical knowledge, you STILL have to make the decision about what is happening now.

If I sit down with my charts and see that we are in a clear trend, and yet I know that markets are 70% rangebound, is this supposed to mean that I should doubt myself?

If I sit down with my charts and see that we are in a clear range, and I know the markets ae 70% rangebound, does this help me at all?
 
virtuos0 said:
I fail to see what advantage this gives you. A good trader will identify what mood the market is in, and where price is flowing, in the here and now. So whether you sit down to trade armed with historical knowledge, or with no historical knowledge, you STILL have to make the decision about what is happening now.

If I sit down with my charts and see that we are in a clear trend, and yet I know that markets are 70% rangebound, is this supposed to mean that I should doubt myself?

If I sit down with my charts and see that we are in a clear range, and I know the markets ae 70% rangebound, does this help me at all?
Click to expand...


I'm not suggesting that you use this knowledge to influence your current trading strategy.
All that I am saying is that if you knew accurately how often a market trends/ranges, it seems like one could devise a strategy based just on this information.
 
mrsoul said:
I'm not suggesting that you use this knowledge to influence your current trading strategy.
All that I am saying is that if you knew accurately how often a market trends/ranges, it seems like one could devise a strategy based just on this information.
Click to expand...
I highly doubt it, a strategy like that is much too 'blunt'. But anyway, if I were you I would take some time to think it over, and write down your ideas, even if you come up with nothing you might have a thought or two about the nature of the markets.
 
IMO the time would be better spend trying to identify why rather than how long the market is roungebound in the first place and then trying to find common conditions leading to a successful breakout into trending.
I cant see how trying to identify the ratio of time trending:ranging is relevant in a changing market. The past is history to a degree. Isn't it?
 
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