Trading strategy: Range Leader S&P500

Description

Range Leader S&P 500 is a strategy published by Charlie F. Wright in his 1998 book 'Trading as a business' (ASIN B0006ROD1O). The strategy was developed to give part-time and novice traders a very easy methodology to trade the popular S&P 500 market index.


  
Suitable for : S&P 500 Market index
Instruments : Futures and CFDs
Trading type : Swing and day trading
Trading tempo : 1 Signal per day on 30'
Using NanoTrader Full : Manual or semi-automated

 

The strategy in detail

The Range Leader is a volatility break-out strategy. It is based around what Charlie F. Wright calls a Range Leader candle (or bar if you prefer to work with bars). A Range Leader candle has two simple characteristics:


1. The range (b) of the candle must be greater than the range (a) of the preceding candle.
2. The midpoint of the candle must be above the preceding candle’s high for long trades (let’s call this a bullish Range Leader), or below the low for short trades (let’s call this a bearish Range Leader).

The lowest timeframe possible for this strategy is 30 minutes. Higher timeframes (60 minutes, day and week) are possible.

When to open a position?

A buy signal occurs when a bullish Range Leader appears. The position is bought at the opening price of the next candle.

A short sell signal occurs when a bearish Range Leader appears. The position is sold short at the opening price of the next candle.

When to close a position?

A buy signal occurs when a bullish Range Leader appears. The position is bought at the opening price of the next candle.

A short sell signal occurs when a bearish Range Leader appears. The position is sold short at the opening price of the next candle.

 

This example shows a short position opened after a bearish Range Leader. The market went up. The stop was hit and the position was closed with a loss.


 

This example shows two consecutive short sell positions after two bearish Range Leaders. The first position reached its profit target and was closed. The following position did not hit the stop or target and was closed just before the market close.


 

This example shows a long position bought after the appearance of a bullish Range Leader. Neither the stop nor the target were hit and the position was automatically sold just before the market close.

 

Conclusion

The Range Leader strategy was described by Charlie F. Wright in his book "Trading as a business". It was a popular strategy in the years after the book’s publication. Wright’s objective was to create a simple strategy for the part-time and novice traders. He seems to have attained his objective as the Range Leader concept is indeed simple and easy to understand by all.

Practical implementation

In NanoTrader Full follow these steps:
  • Choose the instrument you wish to trade.

  • Open a chart with the template study "WHS Range Leader".

  • Semi-automated trading? Simply activate the TradeGuard+AutoOrder or the AutoOrder function.