Example 1. LR Determination
If the price is above support LR we are looking for opportunities to open Long positions.
If the price is below resistance LR we are looking for opportunities to open Short positions.
Forex is the satellite of CME Futures. So we need to use only CME Volume
CME Group is the world's leading and most diverse derivatives marketplace.
Free Daily LRA for the last year you can find on the author's website.
Gravitation LR (abbr. GLR) is the trading range
in which the volume of open “buy & sell” positions accumulates with no
significant imbalance, and it is profitable for the market maker to return the
price back to the range after the range breakout if there are not enough
prevailing loss-making positions to continue price movement in the same
Figure. Averaged graphical representation of the
With an increase of a futures liquidity, a probability
of strong imbalances in the locked-in ranges decreases, while a probability of
an appearance of the gravitation ranges increases. In the future, the
gravitation ranges either “lose” open positions and “are canceled”, or turn
into the locked-in ranges.
The market has a trend structure when the
unidirectional locked-in ranges prevail, and vice versa, the market has a flat
structure when the gravitation ranges prevail.
Just a price chart. Only a price chart. Profit/Loss ratio 1:1. Throw a coin. The odds are 50/50.OBJECTIVE: increase the chances of a 1:1 trade above 50%How to do it?
Ahh, I think I met LRA (Locked-in Range Analysis) analysis somewhere before, where the author is constantly writing something about the cause-effect trading. Maybe this is the same? No, of course not, **** it. Complicated. I will google and looking again for ready-made profitable strategies for trading, I have seen many sellers give a guarantee of profitability for their strategies, or even better, I will look for an automated trading robot. I searched earlier already, but did not find, I think because I did not spend the Malcolm Gladwell’s 10,000 hours to search. Yes, a robot is a good idea, you don’t even have to do anything, because the market was created just for me to make money out of it by a robot bought for 99 dollars. Everyone will envy me! I’ll ride around the city in my “Lamborghini” and smile at the question “How did you?”. Yes, I always despised that, but if now it is possible, then why not ?Let's figure out why you still don't have a Lamborghini. Ahh, you prefer a different brand of car ... Forget it, it's not about your virtual choice.Let's go back to our objective, to increase the chances of a 1:1 trade above 50%.Why 1:1? Why not 2:1, not 3:1, not 5:1 and not 10:1? Because you 've read and heard that these are the basics of profitable trading.For profitable trading, you need to learn to honestly ask yourself the question “Why?”. Why is entry here? Why am I entering here for take profit? Why am I exiting here by stop loss? Why am I using a price chart? Why is the time frame like this? Why am I using a volume histogram? Why am I using this indicator? Why exactly this trading terminal? Why did you choose this broker? Ask the question “Why” until you get to the primary source. Otherwise, you are not a trader. You are learned helplessness.Why LRA?The answer to this question is fully described in the book “Locked-in Range Analysis: Why most traders must lose money in the futures market (Forex)”. Have you read this? If not, I recommend it.Why use LR, because open positions can be accumulated “anywhere in the chart”?They are accumulated. Yes, they are accumulated throughout the chart, from the first transaction on a futures contract to the last price of today. But there is a significant minus in trading days, we do not know where open positions are located. Therefore, considering LR, we increase our chances of correctly determining the accumulation of open positions.Trader's humor: LRA is the worst way to determine OP, but all other methods are even worse.--The attentive reader is still waiting for an answer to the question “why 1:1”? Well .. Hi “Statistics”, please help us to answer the question.The probability distribution of the ratio of the Profit/Loss and the successful outcome of the transaction.1:1 - 50% chance of a successful outcome2:1 - 25% chance of a successful outcome3:1 - 16% chance of a successful outcome5:1 - 10% chance of a successful outcome10:1 - 5% chance of a successful outcomeIn conditions when a trader is fighting for every percentage increase in expectation, using a ratio higher than 1:1 interferes with the objective. Now the choice is yours.Why do we need LR?"Flat Preference" - LR to determine cause-effect take profit. Stop-loss is an unknown variable."Trend Preference" - LR to determine the cause-and-effect of stop-loss. Take-profit is an unknown variable.Defining LR / GLR is possible only on the history. LRA uses the very fact of having a "Locked-in Range" for making trading decisions.What to trade "Flat Preference" or "Trend Preference"? How to choose? At what moment do you enter the market?Determining the moment of entry / exit, the direction of the transaction is already the art of trading, this is how each trader differs from the other. There are no guarantees, only probabilities. In this sense, trading is a game. But, the game is not in the sense of casual earnings, but in the sense of who will play the concrete “party” better. And earn more. How can this be not interesting? Trading is a game of intellectuals! But all play in one game, with the same rules.And how do you play the next "party" you?P. S.And yes, if you do not use cause-and-effect method of analysis to make trading decisions, then throw a coin. The chances of a successful outcome will be higher. But do not forget the 1:1 rule. Greed kills.
* A maximum potential profit of the Gravitation Locked-in Range