Thread: Trading strategy based on ranks ruptures

I want to share a strategy that I have been using based on ranks.The idea is to identify a consolidated range in a graph of 1 hour or 4 hours, and then wait for the price to break that range.I use a pending order to enter the market when the break occurs.Does anyone else use a similar strategy?I would like to know how they have optimized it.

I also operate ranks, but I prefer to do it in 15 -minute graphics.I find that in shorter frames there are more trading opportunities, although it is also more risky.I use an additional filter, such as volume, to confirm the break before entering.

I have had good experiences with ranks ruptures, especially when the market is in a trend.If you correctly identify the tendency direction before consolidation, ruptures are usually quite strong.The only thing is that care must be careful with false breaks, especially in days with little liquidity.

The use of volume as confirmation seems interesting to me.I had not considered it, but it makes sense.Could you explain how exactly you use it?For example, are you looking for a sudden increase in volume just before rupture?

Exactly.If I see an increase in volume while the price is approaching the edge of the range, I take it as a sign that the big players are positioning for a break.But I also take into account the context of the market.If the rupture occurs during a session with high volatility, such as the opening of New York, I give more weight to the signal.

I have tried these types of strategies, but what has worked most is to combine the breaks with a momentum indicator, such as the MACD or the RSI.If both are aligned with the direction of the rupture, the operation is more likely to be successful.I also put a tight stop just below the range in case the break fails.

I like the idea of ??using momentum indicators as an additional filter.Sometimes it is difficult to know if a break is legitimate or not, so anything that increases the probability of success is welcome.Any particular indicator you prefer for this?

Personally, I prefer the RSI because it is easier to interpret for me.If the RSI is leaving an over -sales area, and the price breaks the range in the same direction, I consider that it is a strong signal.Also adjust the RSI configuration to 10 periods to respond more quickly to market movements.

One thing that should not be underestimated is the general context of the market.If you are operating a break just before an important news ad, it is better to be cautious.The market can make erratic movements that cause false ruptures.In those cases, I prefer to wait for the situation to stabilize before entering.

Definitely, the context is key.I have had some failed operations because I did not pay enough attention to the news or the economic calendar.Now I try to avoid operating ruptures when an important event is approaching, or at least, I reduce the size of the position to minimize the risk.