Peak Range (PeakRng)

Philosophy

Analysis through thousands of instruments across all timeframes over the years via CQG’s Entry Signal Evaluator, revealed some very consistent patterns in terms of how long trends can last before they enter there first correction, how long that correction typically lasts, before the most difficult part, which is whether the trend will restart. Part of understanding this process was to assess how long it takes before a swing pattern or Peak forms in that trend.

Peak range was originally developed to overcome the problem of using the normal peak study as a trailing stop on Fx systems on short term charts. Trades would often get stopped out as a Peak level was breached on a closing basis, when in fact there had been little activity to justify such an exit. This typically occurred in the Asian time zone. Therefore Peak Range was developed to ignore a change in a normal peak value if it did not reach a certain criteria. The difference between the range based Peak and normal Peak is the fact that Peak points are qualified by an expansion of range over and above a user defined long term average of Range at Peak points. This is normally set at least 1.25 times normal range (See page 227 of Trading Time).

Interpretation

The thresholds for this study vary considerably from the standard Peak, in that Peak can go for an extended period without changing value. This is normally true when a trend is beginning as nobody knows it’s a new trend and ranges are more condensed than the long term average of range. However, when trends develop and go beyond the normal trend cycle (65 bars), more rapid changes in Peak Range should be evident as range expands on any corrections to that trend. The trend has ended when price closes beyond the Peak Range level.

PeakRng Parameters