Friday, May 1, 2009

Range Chart and Volume Breakdown

Hi guys,
Here is a lesson on using a Range Chart along with a Volume Breakdown indicator. Trevor Harnett of Market Delta recently put out a nice video on VWAP Strategy (on his blog which goes over this subject. If you haven't seen it, check it out.

I have been using this type of chart set up (along with a 6 tick Reversal chart for a good while now. I run them side by side. They each give a different view of the market action. The range chart prints bars of the same size which has its advantages. It is especially useful with the addition of the VB indicator set to Delta.

A really nice trade opportunity showed up today in which this chart set up really shined. I have annotated the chart in detail to help you see what I was looking at.

This kind of situation is not rare. We also a a very nice sense of deceleration near the end of the day when the market came down to developing value area low. I suggest you set up your own chart like this and check it out. Notice what you see.

If you have any questions, feel free to ask.

Hope it helps,



  1. Hi Bryan

    Your posts keep getting better and better very informative. Must be sinking in because I traded at both the highlighted levels today.

    Your work very appreciated.


  2. Tom,
    Your words warm my heart. Way to go my friend.


  3. This post is one of your best explanations yet. Thank you! Very convincing reasons to use the range chart. One question: the developing value area is drawn on your 30 minute chart; is this the TPO indicator in MD or another tool to do this?

  4. Hi Steckley,
    Thanks for the kind words. Yes. I am using the TPO tool on the 30 minute chart set to a standard (TPO based) Value and POC. On all my other charts I am using a volume based Value or VWAP.


  5. Bryan,

    Nice chart idea. I have already added it to my screen. I really like what it shows, will take me a few days to get used to it though.

    Are you finding, like I am, that the 6tick reversal chart is less and less a factor in trade entry decisions? I am focusing more on the levels themselves (leaning against volume like you mentioned) and things like TICK, relative volume etc...

    Just curious. Also, if you don't mind sharing, I had trouble getting aboard the trend today, finding entry. Did the IOAMT room fare any better at getting aboard?

    Thanks for the blog

  6. Hi there Brian,
    My trading is an ever evolving thing. At the moment, I am indeed (like you) focusing more on the levels. I am a bit enamored at present with the 1.5 range chart as I have set it up. I am a very visual person and love the effortless visual cues this chart gives me.

    At present, the jury is out for me on where the reversal chart fits in my strategies. It has always been a challenging chart to master. On Friday, the range chart really shined and helped me far more than the Rev chart. But, I need to give this all time to unfold and see what works best for me. At present, I like having both up.

    Let's keep this dialogue going.

    As to how the IOAMT room fared today, I wasn't in the room much - as I had to work my day job today. So, I have no idea. I do know that Bill was looking at 901-904 today as a reversal area and was looking for long opportunities up to that level.

    Take care,


  7. Bryan,

    Thx for the response. Yes, the 6 tick has always been tough to master. In March I took a week off to back test my levels for proper entry and stop placement.

    I found that if I simply took the entry at or extremely near my noted levels, with a managed stop of 3pts and profit targets of 2 (move stop to BE) and 5 pts, I would be consistently profitable. The 6 tick reversal and waiting for it to stop first generally made it harder for me to manage the trade as I didn't have a clear 2pt winner.

    My goal since then has been to trade the above system efficiently and then increase size and leave a 3rd piece on for bigger moves. Not there yet.

    I am also seeking a resource where I can "learn" to get on board the trend on trend days like Monday. For some reason that is a weakness of mine. Anyone on the blog who knows a good room/site for that, please share.

    Thanks again

  8. Brian,
    A few thoughts. I really looked today at my feelings toward the range chart and the reversal chart. I really think that they both give a different and complementary view of the market. Sometimes, one gives better clues. Sometimes, the other gives better clues. Since I don't have to make a choice,I definitely am (for now)using both.

    I really like to look at the BidxAsk numbers on the Reversal Chart to see when there is a really big, stat high push going into a level. I also really like the pull back column data to aid my entries. Also, there are definitely times, especially after a big push into a key area, when we see one or more failed new lows/highs on diminishing volume that the reversal chart really shines. I noticed one of those today.

    Also, I think that using the two charts in concert will get easier and easier with time and yield valuable information. I will definitely try and posts examples of this.

    As to a resource to learn how to get on board a trend, I have no idea. Bill Duryea and JP (of JPJTrading) who are two of my teachers are both predominantly counter trend traders. Jackie of IOAMT really likes to trend trade and I am definitely learning by observing her on a regular basis.

    I think we need to do really use the tools we have like the Internals, breakout of key levels, volume developing outside of value, Market Profile analysis (where market opens in relation to prior day, open type, etc)to guide our determination of whether we should trade a particular day as a trend or counter trend day.

    Obviously, there are many other determining factors we can evaluate. Then, we need to set up and follow our rules about this. When I see a trend day (in my determination), I look for retracements to initiated volume areas and/or other key levels. Depending on the depth or shallowness of these pullbacks, we need to determine our degree of aggressiveness.

    The earlier we can make those determinations of day type, the earlier we can get on and at a better price. Then, we need to learn to be willing to hold a runner, if we think a big move is probable.

    I hope this helps. If anyone out there has feedback on this, please post your thoughts.

    Take care,