V.10:7 (323-323): Returning To The Basics by John Sweeney

Returning To The Basics by John Sweeney

Since November last year, I've gone through exploiting the trend-related activities — trading the underlying trend, adding trades to the trend trades and reversing trades when wrong about the trend — but there's the other half of trading that some would say is going on 80% of the time: trading-range trading.

Recall that the original system was a trend-following system but inevitably, there were times when no trend was apparent. Thus, the first clue to a trading range is being out of the market when using the underlying system.

Another clue to look for is flat behavior in the trend indicator, in this case SMA35C (Figure 1), which is the simple 35-day moving average of the closing prices. ...