I know a Trader that went 18 months without a losing trade. This Trader averaged trading 700-800 contracts per month in the Futures markets.

The was not his only system but here were his rules.

He looked at the 60 minute bar and calculated the ranges of the bars over the last 3 months. IF the range of the Bar was Greater Than the 99th Percentile, He would Fade that move or take the trade in the opposite direction.

Thought process is If the Price Bar is Greater Than the 99th Percentile then typically the market reverses. This happens a lot of times at news events. If you’ve studied the markets long enough you know if a Nes             based event causes a Huge Move, which we define as Greater than the 99th Percentile, the Market typically moves in the opposite direction.

***This is dependent on the Instrument your trading and the time frame your trading. Some Instruments and time frames this signals a continuation move.

I also added in the Low of the Range based on the 99th Percentile. Often times Low Range Bars…especially if they appear at the top of a swing move, or the bottom of a swing move…create a high probability entry once the High or Low of the bar is taken out in the opposite direction of the previous move…The Low Range bars show indecision after a strong move and create great reversal opportunities.

Works on All Time Frames…again depending on the instrument your trading.

On instruments that MOVE or have High Volatility like Crude and Oil             you can get great signals on 1 minute bars.

***Code includes ability to pick ham many bars you want your Look Back Period To Be.
***You can change the percentages to use the 99th Percentile, or 95th percentile, etc…
***The Green Line is the Value of the High Range Percentile.
***The Red Line is the Value of the Low Range Percentile.
***Plots a Magenta Cross on the Red Line if the Range is Below the Low Range Percentile.
***Plots a yellow Cross on the Green Line if the Range is Greater Than the High Range Percentile.
***The Aqua line is the Midpoint of the Range. Or the Average Price Move.
***Colors the Price Bar Yellow if the Range exceeds the High Range Percentile.
***Colors The Bar Magenta if the Range is Less Than the Low Range Percentile

***All parameters can be turned on or off via Check Boxes in the Inputs Tab
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//Created by ChrisMoody on 6-22-2014
//Plots the High Range of Price bars, based on X Bars Back, converted into a percentile.
//Also plots the Low Range based on the same Criteria mentioned above.  Plots the Midpoint.
//Gives a signal if > than High Range, or < than Low Range.
study(title="_CM_BarRange_Percentile", overlay=false)
lb = input(60, title="Look Back Period (In Bars)")
ph = input(.99, title="Highest Percentile - 0.90=90%, 0.95=95%, 0.99=99%")
pl = input(1.01, title="Lowest Percentile - 1.10=90%, 1.05=95%, 1.01=99%")
hp = input(true, title="Show Value of High Range - Based on Percentile and LookBack Period?")
lp = input(true, title="Show Value of Low Range - Based on Percentile and LookBack Period?")
mp = input(true, title="Show Value of Average Range - Based on Percentile and LookBack Period?")
er = input(true, title="Show Histogram When Range Is Greater Than High Range Percentile?")
lr = input(true, title="Show Histogram When Range Is Less Than Low Range Percentile?")
//Paint Bar Inputs
spbh = input(true, title="Show Paint Bar If Range Is Greater Than High Percentile?")
spbl = input(true, title="Show Paint Bar If Range Is Less Than Low Percentile?")

range = high - low

rangeHigh = (highest(range, lb)) * ph
rangeHighPlot = range > rangeHigh
rangeHighPlot2 = rangeHighPlot * range
rangeLow = (lowest(range, lb))[1] * pl
rangeLowPlot = range < rangeLow
rangeLowPlot2 = rangeLowPlot

//50% Value of Range
averageRange = (rangeHigh + rangeLow)/2
//Paint Bar definitions
isHighPercentile() => rangeHighPlot
isLowPercentile() => rangeLowPlot

circleYPosition = rangeLow
circleYPositionH = rangeHigh

plot(hp and rangeHigh ? rangeHigh : na, title="Range High Percentile", style=line, linewidth=4, color=lime)
plot(er and rangeHighPlot2 ? circleYPositionH : na, title="Signal Greater Than Range High Percentile", style=cross, linewidth=6, color=yellow)
plot(lr and rangeLowPlot2 ? circleYPosition : na, title="Range Low Percentile", style=cross, linewidth=8, color=fuchsia)
plot(lp and rangeLow ? rangeLow : na, title="Range Low Percentile", style=line, linewidth=4, color=red)
plot(lr and rangeLowPlot2 ? circleYPosition : na, title="Signal Less Than Range High Percentile", style=cross, linewidth=8, color=fuchsia)
plot(mp and averageRange ? averageRange : na, title="Range High Percentile", style=circles, linewidth=3, color=aqua)
barcolor(spbh and isHighPercentile() ? yellow : na)
barcolor(spbl and isLowPercentile() ? fuchsia : na)
this makes no sense

"iF the ""range of the Bar"" was Greater Than the 99th Percentile, He would Fade that move"

"If the ""Price Bar"" is Greater Than the 99th Percentile then typically the market reverses"

what you mean by Price Bar and range of the Bar in above two example and what is your analogy for word reversal and fade? 1. reversal= you made a mistake taking that opposite move 2. fade = take opp move and hope it goes well
Love this indicator Chris ! Thanks !
Hi Chris,

Can you make an indicator that identifies previous candle patterns that match the current formation and plots ahead based on the previous pattern? Guess it's a bit like card counting but with candles.
ChrisMoody SaudiMail
Can I make a indicator that shows any candle patterns...past...and as they form...Yes...

What do you mean plots ahead....I own a lot of candlestick pattern indicators...nothing plots ahead...that would be guessing...but no...currently we can't plot ahead in PineScript.

If there are specific patterns your looking for let me know
SaudiMail ChrisMoody
Thanks for responding so quickly Chris. What I'm thinking is that patterns tend to repeat themselves, so guess something that identifies a current trend and from that can predict what the next candles will be. Say on a 4 hour chart the pattern is something like 5 candles going up, 3 down, then maybe 8 trending sideways, then 4 candles going up. So then several hours later, the pattern starts, 5 up, 3 down, 8 trending sideways...... if an alert or something could say 'hey, last time this happened the next 4 candles went up'.
ChrisMoody SaudiMail
Got you...I have pattern recognition ability on a expensive platform I own...not currently possible in PineScript...But in a future release...
SaudiMail ChrisMoody
Thank you.
2use ChrisMoody
Good idea - i also wonder if it is even possible to have a patter recognition type of custom code.
cristian.d ChrisMoody
Speaking of candle patterns, is there any indicator that shows trend reversals/continuation based solely on candlesticks? Something like using the strongest patterns, hammers, shooting stars and so on? I used to play and papertrade only with candlestick signals and I was 75% successful. Thank you,
ChrisMoody cristian.d
Currently not an indicator strictly for those purposes...I have a good understanding of Candlestick Patterns..but I'm not a solely Candlestick Pattern Trader trader. let me know what you consider the Strongest patterns and I'm happy to code the Indicator.
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