Trading strategy on Range Bars
This signal system consists of several different methods and trading sets based on indicators and signals, which we identify on a daily basis in order to earn large profits. However, we also trade based on market structure and direction (up, down, sideways) and not only based on signals. Therefore, identifying the moments when the price movement is approaching the zones that can have an impact on the price movement is very important to our trading plan.
F4 Deal and Range Bars
Every morning before we trade, we assess the market structure to determine aspects of the various methods. We analyze both large and small time ranges to assess the perspective we need before we start analyzing the market for trades. If the market gives us an opportunity to trade, we use the smaller time range chart to look for our trading signals. One of the trades that we regularly use on our smaller time ranges is F4 deal. It is easy to use, gives great profits and is based on the breakdown of the zones on the Ranged bar charts.
To understand what is F4 dealyou should have an idea of Range Bars. Range Bars were first introduced in 1995 by Vincent M. Nicolellis when he tried to solve the problem of volatility in the Brazilian stock market. He proposed to abandon the use of the time factor when plotting charts, and proposed to concentrate on the vertical axis rather than the horizontal one, which is used in time and tick charts. By eliminating time, he was able to concentrate only on the net price movement.
Everyone Range Bar represents a specific price range on the vertical axis, a new bar is not displayed on the chart until this range is covered on the vertical axis. Using Range Bars allows you to remove market noise during price consolidations and identify patterns with greater clarity than tick and time charts allow. A pattern that displays a RANGE BAR is unique because the closing price of one bar will always be the opening price of the next bar, except during certain periods in the market when it is closed or during news that cause strong movements in the markets.
Using Range Bars with several time ranges gives us a clear picture of market behavior in the short, medium and long term.
We use three charts to get a picture of all the time ranges on our selected chart. We use a chart with an RANGE of 5, which gives us a short-term picture to identify trading signals, along with a chart with an RANGE of 45, which allows us to assess the longer term and gives us support levels and resistances. We use the RANGE 15 chart to assess the medium-term outlook and show strong trends and market vibrations. We use the clear patterns of the RANGE 15 chart to open positions in the direction of a strong trend or in reversal zones.
F4 trading signal is designed for markets with a strong trend. When we identify a strong trend over a longer time frame, we start looking for price movement signals. The F4 pattern begins with a reversal bar against the strong trend, continues for four bars against the trend and ends with a reversal bar in the direction of the strong trend. Very often the F4 trade is a pattern consisting of two steps. It contains two consecutive pullbacks consisting of three bars each. We set the initial stop two ticks above (for a short position) and two ticks below (for a long position) the bar on which we are entering. With the close of the bar on which the entry was made, or when we have made a profit of 9 ticks, the stop loss is moved to the breakeven level. After that we drag the stop using the ATR indicator.
Manage F4 deal is as simple as identifying it. We enter multiple contracts and manage the trade, locking in profits incrementally at levels that are based on market structure and analysis of higher timeframes. We add contracts when the F4 trade breaks the technical zones, or when a pullback occurs and another F4 pattern is formed. The result of this trade is a combination of small stops and large profits on large price movements.
On chart 1 we see a standard pullback of 4 bars. The trend should be confirmed on the chart with a larger time range. Entry F4 is made on the basis of a pullback of at least 4 bars. The last fourth bar must have a long tail, preceding the reversal of the bar in the direction of the trend - this rollback allows to identify the previous three bars as a rollback against the trend.
Figure 2 shows a modification of the pattern called the M4 2-step pattern. The pattern consists of three bars or two pullbacks of three reversal bars, unfolding into a pattern of 4 or more bars.
Deal F4 If used correctly, it provides us with an opportunity for gigantic profits. The trade entry signal should always have a confirmation on a chart with a large time range. The pattern is based on pure price behavior, it does not use indicators, except for stop loss based on ATR. Using pure price behavior in our work allows us not to overload the charts with unnecessary indicators. Testing this pattern, we came to the conclusion that it works fine without any filters. The only reasonable filter to use is the time of day filter. The pattern works best during the peak hours of the London and New York sessions. The best times to trade this pattern are 4-7 EST and also 9:30-12:00 EST.
Remember - trend is your friend!