WL 0800 Range Break-out
Description
WL stands for Wim Lievens, a Belgian trader with over 20 years trading experience.
The WL 0800 Range Break-out strategy is a typical market open strategy. It is based on the commonly accepted Wall Street principle which states “the market open price is not randomly distributed, but is more than likely to take place at the high or the low of the day which just started”. In simple terms, this means that the open price is more often than not around the high or the low of the day.
This example shows 32 random days of the DOW index.
There are 12 bars in which the open price is not within 20% of the high or low of the day (e.g. bars 1 and 2).There are 20 bars in which the open price is within 20% of the high or low of the day (e.g. bar 3).
| Suitable for | : Market indices (DAX, CAC, DOW...) : Stocks : Forex (EUR/USD...) : Commodities (oil, gold...) |
| Instruments | : Futures, CFD, stocks, forex |
| Trading type | : Day trading |
| Trading tempo | : 1-5 signals per day |
| Using NanoTrader Full | : Manual and (semi-)automated |
The WL 0800 Range Break-out package contains:
- 1 strategy
- 1 hour online teaching by Wim Lievens
- 10 hours video teaching in German, French and Dutch by Wim Lievens
- Unlimited telephone access to the help desk
Click here to buy the WL 0800 Range Break-out package in the store
The strategy in detail
Note: the WL 0800 Range Break-Out strategy is available in a version for NanoTrader Full and a version for NanoTrader Free. The version for NanoTrader Free is a simplified version which is briefly explained at the bottom of this article. This article details the complete, optimal strategy.
Wim Lievens follows two rules: (1) the trader needs to adapt to the market, the market will never adapt to the trader and, (2) time is not relevant, movement is relevant.
In order to follow these rules the strategy uses candles (bars) which are based on range not on time. A range candle is drawn only if the market goes up or down a certain number of points (pips for forex). This puts time out of the equation. Only movement and range are relevant.
When to open a position?
To build the opening range the strategy uses the first five candles after 08h00 for European instruments and the first five candles after 16h15 for U.S. instruments.
This example shows the ranges. The darkest range is the opening range. The other ranges are calculated using the opening range. There are 4 ranges above and 4 ranges below the opening range.
Tip: you can easily see if a trading day was profitable ... if the market price passes through 2 of the 4 ranges, the strategy made a profit. This is the case in the example above.
The open range and subsequent 4 ranges are calculated on the basis of the highs and the lows of traditional range bars. The signals are triggered by heikin ashi range bars in the chart. When the heikin ashi closes 1 tick above the green line a long position is bought at the market price.
When the heikin ashi closes 1 tick below the red line a short sell position is sold at the market price. Signals are indicated by the green and red vertical lines in the chart.
When to close a position?
The 0800 Range Break-out strategy always opens a position of 4 lots. Each lot has a different profit target. The profit targets are 1x, 2x, 3x and 5x the opening range.
There are 2 stops for 2 lots each. The stops are initially placed on the bottom of the opening range in the case of a long position and on the top of the opening range in the case of a short sell position.
This example shows the situation just after a long position of 4 lots has been bought. The 4 profit targets are the orders with the green labels. The 2 stops are the orders with the red labels.
Both the stops are currently placed on the bottom of the opening range, one on top of the other. Hence we see only one label, but the label shows 2/4, meaning there are 2 stops for a total of 4 lots.
If the first profit target is hit, one stop is automatically reduced to 1 lot. This stop is moved up to the middle level of the opening range.
This example shows the situation the instant the first target has been reached. The stop, which now covers 1 lot, has been moved up to the middle of the opening range. Three targets remain.
If the second target is hit, two stops, each for one lot, remain. The stops are moved up to the break-even level.
This example shows the situation after the second target has hit. The stops have moved up to the break-even level. By coincidence the level corresponds to the top of the opening range. Two profit targets remain.
If the third target is reached, the stop is raised to the first target level and is converted to a trailing stop.
This example shows the situation when the third target has been reached. The stop is now trailing the market. One target remains.
Either the target is reached or the stop is hit.
This example shows the final stage. The market price did not reach the last profit target. The position was stopped out with a profit.
The 0800 WL Range Break-out strategy also contains a trading time entry and exit filter. The trading filter will block new entries at 16h15 or 20h20 and at close a remaining open position at either 17h15 or 21h45.
Settings
The trader needs to set the span of the range candles in his chart according to the instrument which he trades:
| Instrument | Span range of candles |
|---|---|
| DAX 30 | 5 points |
| EuroSTOXX 50 | 2 points |
| CAC 40 | 3 points |
| EUR/USD | 3 pips |
| GBP/USD | 3 pips |
USD/JPY  |
3 pips |
| Bund | 0,02 points |
| DOW | 5 points |
| AEX 25 |
0,2 points |
| E-Mini S&P |
0,8 points |
| Nasdaq |
1,5 points |
The trader sets the start time from which the opening range is build. To build the opening range the strategy uses the first five candles (after 08h00 for European instruments and after 16h15 for U.S. instruments). The trader can change all parameters in the DesignerBar.
In this example the opening range is set for trading U.S. instruments by entering 1614 as the StartTime. The trader will accept up to 2 long and 2 short sell signals.
Advantages of the WL 0800 Range Break-out strategy
- Clear and well-defined rules. The trader knows at any given time what he needs to do.
- Automated and semi-automated (manual open, platform close) trading are possible.
- The strategy has not been optimized for a particular market. The rules can be applied to any liquid market.
- The strategy does not rely on any "artificial" indicators. The strategy therefore adapts easily to changes in the markets.
- Excellent return-risk ratio, initially set at 3.
The WL 0800 Range Break-out package contains:
- 1 strategy
- 1 hour online teaching by Wim Lievens
- 10 hours video teaching in German, French and Dutch by Wim Lievens
- Unlimited telephone access to the help desk
Click here to buy the WL 0800 Range Break-out package in the store
Practical implementation
The NanoTrader Full is ideally suited for this trading strategy based on multiple targets and stops and on quick entries. The best approach is to implement the strategy in an automated way by using AutoOrder.
• Select the strategy in the WHS Store folder.
• Set the parameters as described in “Settings” above.
• Activate AutoOrder.
In the trading store you can also buy a version of the strategy for the NanoTrader Free. The simplified strategy works as follows:
• Select the strategy in the WHS Store folder.
• Set the parameters as described in “Settings” above.
• Activate TradeGuard+AutoOrder.
• Open a position manually when the market closes outside the open range. A position consists of 2 lots (not 4 lots).
• Regarding the stop. If you have activated TradeGuard, the stop order for 2 lots will be placed automatically. Slide the order to the bottom (top, if you are short) of the opening range.
• Regarding the targets. Place one sell order and slide it to the edge of the first range. Place a second sell order and slide it to the edge of the fourth range.
• Once the first target and the market moves in the right direction, move the stop from range to range.
Click here to buy the WL 0800 Range Break-out package in the store