Theoretically 70% of the time markets will be trading in a range. They are in a trend only at the remaining 30% of the time.It is very difficult to know exactly where the trend will start and where it is going to end.By the time we know a trend has started it is too late to enter and we are not able to capture a major portion of it.
So I thought it is better to trade the markets as if it is in a range 100 % of the time . Then I am going to be correct 70 % of the time.I assume the market is in a range all the time and for me a trend is a breakout of a range extreme. A prolonged trend is a series of range breakouts where as the range is a series of range breakout failures.
The first task was how to define a range. Markets move in waves.There are two types of moves impulsive and corrective. Impulsive moves are momentum moves in the direction of trend and corrective moves are weak counter trend moves. Every wave is a probable range.Generally during trend periods corrective waves become ranges. Impulse waves too can become ranges especially during sideways market periods.Ranges can overlap and there could be ranges inside a range.I try to buy the range lows and sell the range highs.
Every range extreme is not tradable in my scheme of things. I would like the range extreme to match with trader decision points, in other words a confluence.A slight change in perspective can make a lot of difference. Many people struggle with the concept of trend in multiple time frames and get whip sawed left and right.
I hope I could convey what I wanted to say.. Otherwise please let me know