Box Trades or range breakout trade is one of the simplest and high probability trades out there, just the way I like it. It works with all markets.

What is needed to create a box:

• at least two lows at same level
• at least two highs at the same  level

Once 2 lows and 2 highs are created (orange arrows), trade is “boxed”, with strategy being buying the break above the highs, or selling breakdown below the lows, with ultimate target of the pattern being full height of the box, and stop being right below the opposite end of original box, i.e if buying break out - stop below the low of original box, if selling the low - stop above the original box.

——————————————————————————————————————————————

That is the definition of the trade, there are several problems that can occur:

• GOTCHA breakout - where new high or low is made by a few ticks and then sharply reverses.
• Box is just too big to fit risk tolerance of a trader, for instance on this particular Swiss Franc Trade of the box is about 80 pips or $1000 / contract.

To solve that problem, wait for a breakout one way or the other and then the backtest of the original box (green arrows) to enter.

Can call Mr Fibonacci for stop and target ideas, for instance multiple lot traders could make 23.6/38/50% of original box extension target, with same amount of stop within the original box (color coded rectangles on last chart)

Single lot traders after reaching what would be first target should move stop to break even or slightly into the money or below the low made on backtest.

Another good stop idea is below the recent significant low - red arrow on the chart, as breaking that low would technically break the uptrend.

————————————–

On this same chart there is another box trade:

On this particular box trade , there is no backtest of the original box, so even though trade was successful you would likely never get in. This would generally go down as a set up that didn’t fully develop, unless per your trading plan and your risk tolerance on boxes smaller than x amount of ticks you would simply buy the breakout and stop out on the opposite extreme of original box.

———————————————-

Box trades develop often, are simple, profitable and easy to spot, this was just from yesterday and also posted a twitter udpate about it as it was developing

These are the time frames and indicators I use to trade ES - SP500 emini futures

• Monthly & Weekly. Heikin Ashi bars.
• Daily. 20, 50 and 200 exponential moving averages. Heikin Ashi bars.
• 4 Hour.
• Hourly. 20, 50 and 200 exponential moving averages. Heikin Ashi bars.
• 2500 tick chart. Heikin Ashi bars.
• 377 tick chart. 55 ema. Heikin Ashi bars.
• Daily Pivots are also marked on all charts

I also use a custom momentum indicator with all those time frames, but Stochastics or RSI should do.

Note: these are tick/timeframes that work for me, your system might need something completely different.

These are the time frames and indicators I use to trade GC - Gold Futures

• Daily. 20, 50 and 200 exponential moving averages. Heikin Ashi bars.
• Hourly. 20, 50 and 200 exponential moving averages. Heikin Ashi bars.
• 987 tick chart. Heikin Ashi bars.
• 89 tick chart. 144 and 233 exponential moving averages. Heikin Ashi bars.
• Daily Pivots are also marked on all charts

I also use a custom momentum indicator with all those time frames, but Stochastics or RSI should do.

Note: these are tick/timeframes that work for me, your system might need something completely different.

These are the time frames and indicators I use to trade Euro Currency Futures - EC/6e

• Daily. 20, 50 and 200 exponential moving averages. Heikin Ashi bars.
• Hourly. 20, 50 and 200 exponential moving averages. Heikin Ashi bars.
• 144 tick chart. 55 and 233 exponential moving averages. Heikin Ashi bars.
• Daily Pivots are also marked on all charts

I also use a custom momentum indicator with all those time frames, but Stochastics or RSI should do.

Note: these are tick/timeframes that work for me, your system might need something completely different.

These are the time frames and indicators I use to trade following currency futures: Aussie @AD/6a, British Pound @BP/6b, Canadian Dollar @CD/6c, Swiss Franc @SF (main currency futures I trade are Euro futures, these are as I refer to “exotic” currencies to me I trade during special setups)

• Daily. 20, 50 and 200 exponential moving averages. Heikin Ashi bars.
• Hourly. 20, 50 and 200 exponential moving averages. Heikin Ashi bars.
• 55 or 89 tick charts depending on price action and the way that particular currency reacts to Heikin Ashi.
• Daily Pivots are also marked on all charts

I also use a custom momentum indicator with all those time frames, but Stochastics or RSI should do.

Note: these are tick/timeframes that work for me, your system might need something completely different.

For $TICK - NYSE Cumulative Tick:

• 1 Min chart with 1 period moving average, 60 minute LRC channel, horizontal lines across +1000, +800, -800, -1000 reading and also horizontal line across any high/low outside 1000 range.

Multiple Time Frames

When analyzing markets it is important to look at multiple time frames. For instance if you are trading off of 5 minute chart, it is still very important to know where key levels are on bigger charts like hourly, daily or even weekly. If you are taking long set up right into short set up of bigger time frame, it severely decreases the probability of your smaller time frame trade.

That is the reason I feel it is important to look at monthly and weekly charts at least once a week, daily charts daily, and then keep all smaller time frames up on your screen for intraday analysis and looks for new levels as more price action.

When I do my analysis I like to start with largest time frames andd drill down to the smallest ones.

———————————————–

Tick Frames

Tick frames are charts generating bars per particular number of transactions as opposed to time. For instance 100 tick chart will produce a bar for every 100 trades. Tick frames are great for charting pure price action, as during one 15 minute period during slow time of the day there might only be 200 trades that take place and during the busy time of the day over 2500. Here is a look at 15 minute and 2000 tick chart of two days of price action color coded are same exact amount of trade, but relayed very differently via tick and time frames

Hey Traders,

added Google Friend Connect to the site, you can find it in the sidebar of the site right under recent entries, if you have Google, Yahoo, AIM or Open ID account you can join with one click:

Not entirely sure on all the features of it, but saw it a ton of places around the internet, so figured it might as well get one too. So lets Friend Connect.

Cheers

Vlad