Junkin’ Narrow Range Bars in this Market

Junkin’ Narrow Range Bars in this Market

Oct 10, 2006

I can’t call The South my home because I don’t venture out beyond a perimeter highway that encircles the city of Atlanta, GA called, “The Perimeter“. I live in Atlanta and enjoy every minute of its natural beauty and big city mix. But certain southern terms creep their way into my vocabulary and one example is the word, “Junkin”. A term that describes the art of finding a gem in the garage sale.

TraderMike fielded a question about narrow ranges and our NR7 alerts and gave a detailed explanation you can’t miss.

This got me junkin’ through some of our older strategy sessions regarding the NR7 alert. I think its appropriate to revisit one of the first strategy sessions we created using the NR7 alert – considering TraderMike and a few others convinced us to add it. Using The Odds Maker I found a tweak that makes this strategy sparkle again.

Dan created this strategy and it’s become one of our most popular posts: “I saw it on the Discovery Channel

Does this strategy perform well? Thanks to The Odds Maker a trader can evaluate if a Trade-Ideas strategy produces reliable, profitable trades in the current market. Let’s take Dan’s strategy. I ran a lot of different Odds Maker configurations (which govern how long the trade is held and when the trade takes place). I got dismal results with no clear odds for going long or short. Many of the trades were losing trades that were also greater in value than the combined winning trades.

So how did I tweak this strategy? One tip is to add a volume requirement for pulling the trigger on a trade. In this case I demanded that all the alerts be subject to a minimum current volume ratio of 3. This means the stock has to be trading 3x what it normally trades at the moment of the alert.

The results were vastly different than before.

Here is the revised strategy:

I saw it on the Discovery Channel (with the Volume Up)

Here are the results from The Odds Maker:

Although the win rate is less than 50% at 43.15% this is still a decent strategy. Why? Take a look at the average winner vs. the average loser. It’s twice the size! That means you will lose less with the losing trades and score much more on the winning trades. The net winnings calculates the exact result of trading all 343 trades in this sample – $19.08/share traded. Note: You could easily see these results expressed as a % as well. The average winners and losers give you an easy signpost for knowing what to expect in a trade and where stops and profit targets should go. The Casino Factor high score of 90.91% supports how reliable those averages are.

Read more about The Odds Maker from our Manual and get started using The Odds Maker in your trading (in the latest version available for download) while we are still in beta! (Beta ends November 1!)

Go junkin’!