About

This is a comprehensive method that will provide a great deal of information about any trading instrument, including but not limited to:

1. An idea of the weekly and daily trend, or lack thereof.

2. Excellent places to take an entry for a position trade.

3. Excellent places to take an entry for a scalp.

These lessons will demonstrate how to combine indicators for consistent results. The first indicator I am going to cover are envelopes I call the range bands. The range bands are similar in concept to the popular Bollinger Bands, but are far more responsive.

The original author of the range bands was William C. Oakes of Galesburg, Illinois, a futures trader who called his trading ideas “The Redline System” when he offered them for sale in 1985. Bill called his range bands the greenlines. The greenlines were just one component of Bill’s system, while the brownlines, the redline, volume, open interest, and price history were the others. Bill used to say “Stay out of that middle! That’s where they chop ’em!”, which was Bill’s way of warning traders who bought his system to look for a long entry only when the price went below the daily lower greenline at the same time his other indicators were favorable.

Bill had no personal computer to use back then – hardly anyone did – and so had to draw everything by hand on large pieces of graph paper and was using only daily charts and was following only a few futures markets, including what Bill called “the beans, the bonds, and the bellies”. I quickly coded the formula for the greenlines on my first of many personal computers, an original IBM PC I bought in 1984. I will never forget Bill’s surprised reaction when I visited him for personal instruction and brought my computer into his home to show him a Lotus 1-2-3 graph of the greenlines on my 25-inch Mitsubishi TV/RGB CRT monitor. That was a very heavy monitor to travel around with, but heavy was all that was available back then.

I quickly made an adjustment to the greenlines when I decided to experiment with time periods other than daily.

I paid $1599 for that first personal computer and it had an 8-bit 4.77 MHz processor. A computer with today’s 64-bit Intel Core i9-14900K processor with its Max Turbo Frequency of 6 GHz is over 1000 times faster and far more sophisticated. My first computer also came with 64K of RAM, a 65-watt power supply, and two 5.25-inch floppy drives. It had no hard drive and no video card. I bought a Plus Hardcard for my hard drive needs after I saw a newspaper ad for one available at a local university bookstore in Boston. A bookstore employee told me they had mistakenly advertised the hard drive for less than their cost, but would honor the price in the ad. Even with that extra discount, it cost me over $365 for 10MB. That hard drive was full in just two weeks. Nowadays, you can buy a 10TB hard drive for less money. A 10TB hard drive has a million times more storage than my first hard drive. And a laptop with 64GB of RAM has a million times the capacity of my first computer. My 2018 iPhone 8 Plus has 64GB of RAM. The iPhone 15 Pro Max has a minimum of 256GB of RAM and a maximum of 1TB of RAM. The large TV/RGB monitor and the small monochrome monitor I bought were additional expenses.

I had to copy down daily data from the Wall Street Journal and weekly data from Barron’s at the Belmont, Massachusetts library and carefully type it all in. The Arlington, Massachusetts library was my main, but not only, backup for the inevitable missing issues of the Wall Street Journal and Barron’s. Daily and weekly data was all that I could get at first.

If you wanted live quotes, you had to set up a satellite dish and pay hundreds per month for the service. Commodity Quote Graphics would run over $800 a month for service with all of the futures exchanges. Of course, that kind of money was a much bigger bite on the budget in the 1980s than it is now. Just to be subscribed to the Merc and the CBOT alone back then would cost $115 a month in exchange fees. And we had to phone our brokers back then to make a trade. It cost $25 a round turn back then and that was only if the broker was a discount broker.

The progress since then has made following the markets, and especially being a market technician, so much easier. And way less expensive. In fact, most of it will cost nothing these days.

I used TradeStation for twenty-five years and coded TradeStation’s EasyLanguage to display my range bands on every chart and eventually moved to thinkorswim and then to NinjaTrader.

Over the years, my computers have allowed me to eventually experiment with the range bands on all different time periods, from one minute to yearly and on all different trading instruments, including futures, forex pairs, stocks, and even stock options.

Type A and Type O

Yes, these are blood types, but I am using them here to denote the two different ways to trade this system. Type O refers to traders who wish to trade only one trading instrument, while Type A refers to traders who are open to trading a number of different trading instruments.

If you choose to be a Type O trader, you have a favorite trading instrument, which for many will be an exchange traded fund such as the SPY or the QQQ and for many others the S&P 500 E-mini futures contract or the Nasdaq 100 E-mini futures contract.

If you choose to be a Type A trader, you will follow a number of different trading instruments and you would do well to look for the ones that are trending the best. You might choose to follow mostly FAANG stocks, meaning Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Alphabet (GOOGL). Or you might choose to follow some other Nasdaq stocks, such as NVDA and TSLA. With the type A approach, you will be less likely to go against the system by trying to pick a bottom in a sideways market simply because you want more action. You would ideally look for a trading instrument that is trending and is trending well. Best is to look for a trading instrument that is trending the most strongly of all of the trading instruments that you follow.

I attended a two-day Market Profile workshop in Chicago taught by founder of Market Profile Pete Steidlmayer in the late 1980s and his advice back then was to stick with markets that were trending.

This bears repeating: Pete Steidlmayer’s advice back then was to stick with markets that were trending.

Platform

These indicators are available on NinjaTrader.