Making Adjustments

As a long time proponent of range momentum bars to rid myself of some of the noise of the market, I have found that with the way that the markets and the participants are acting, adjustments have to be made.

For a long time, I often did not change the "periodicity" of my range bars. With the activity of the HFTs and the various worldwide impact from events, I have found that I am making range bar changes quite often. In fact, I may trade the morning in London with one range length and another in the London afternoon. Why? Because the markets often just trade differently and I need to make adjustments. Changing the range bar size is like zooming in and out. If I were to trade the ES during the NY lunch time, I would definitely look at a different range bar size as volume declined. Additionally, if I am scalping for fewer ticks I reduce bar size too.

One thing that should be borne in mind, the important thing for me in using range bars is that I get a smooth looking chart. The result of shorter bars can be tighter stops as well as closer targets. The reason is that if I am trading the peaks and troughs, the shorter range bars catch more micro moves. The risk is that the average profit per trade falls and that is something that needs to be tracked.

While I may change the periodicity of a range bar, I do NOT change the methodology. My EMAs and CCIs remain the same in all time frames including day and week. Volume Breakdown is not as useful when I'm scalping as a lot of delta information can be, and is being hidden by the size traders in the very short term, although they can't hide their footprints. "Invisible Man".