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The pattern described below illustrates that a trading bars opening price is near that bars
extreme (the high or low of the bar) a very high percentage of the time. The preferred time
frame for assessing this technique is daily bars or 60-minute bars. You will undoubtedly
agree that the open price of a bar is near one of its bars extremes a high percentage of the
time. It is the futures traders job to profit from this recurring pattern.
Using your charting software, pick a futures market. It doesnt matter whether you choose a
market in grains, metals, energies, softs or currencies.
On each bar, locate the Opening Price and examine its proximity to either the high or low of
that bar.
Use your judgment - you will find that an usually high percentage of a bars open prices are
within close proximity to one of that bars extremes (the high or low of the bar).:
Things to consider:
1. Determine the threshold or level that qualifies an open price as being near one of the bars
extremes. For example, if a bar trades from a price of 1 to 100, and the open is at 80, then
you will need to decide if that bar qualifies as one that has an open price near one of the
bars extremes (in this case 80 is near the high). The only way to do this is to review many
bars (100 or more). You may find that 80 is not considered close enough to the extreme of
the bar, and that perhaps 85 to 90, or 10-15 are near the bars extremes (high or low,
http://www.abcfutures.com/2008/07/opening-price/ 11/2/2009
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Please note that risk management is critical to making this technique work. One approach
may be to put a stop loss order on the opposite end of the threshold, should the trade not
work as expected.
I will discussing software programming and black box trading in a separate category on this
website. Note that this open range price technique is easy to test using common tools, such
as Microsoft Excel or Microsoft Visual Basic or Visual Basic For Applications.
http://www.abcfutures.com/2008/07/opening-price/ 11/2/2009
Futures Trading: Automated Trading Systems and Technical Analysis | Futures Trading T... Page 3 of 3
Anonymous
FYI - this technique is currently working well in Crude Oil, Corn, Wheat and E-Mini S&P 500
markets.
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