Range trading refers to a condition when prices move within a trend channel. During this time, prices move within a range that is bound by an upper resistance level and a lower support level.
Range Trading: Useful Trading Tips
Here are some useful range trading tips:
- Find the trend channel: This is the most important thing for trading a range. After identifying the trend channel, you must draw support and resistance levels.
- Establish Relative Strength Index (RSI) or Stochastic: Also known as oscillators, these two indicators help identify if the market is overbought or oversold.
- Establish Moving Average Convergence-Divergence (MACD) indicator: This helps in evaluating whether the price will stay within the range or break out of it.
Then, you have to wait for the price to move near the resistance and support levels. When the price nears the resistance line, look at the oscillator to check if the market is overbought. If it is overbought, check the MACD to see the probability of a bearish crossover occurring. If all these are met, you can enter a short trade to earn profits (as the price will be deterred by the resistance line and will continue to move within the range).
If the price moves to the support level, you can follow the same steps. However, you will look for an oversold signal from the oscillator and a bullish crossover from the MACD.
If you are interested in using this strategy, you must try it on your demo account first. The strategy can also be adjusted to complement your trading style. You must switch to a live account only if you are consistently able to produce profits with the strategy.
Are Free Forex Range Trading Systems Effective?
While the Internet offers a range of free range trading systems, experts caution against using these. Here are the main reasons for avoiding them:
- Unreliability: They are usually undependable, as their results may alternate between profits and losses. However, the best, paid systems, hand, guarantee around 200% return a month and also offer a refund in case you are not satisfied with the product.
- Lack of accuracy: Free systems hardly give you the accuracy that you want or they claim to give. The best forex systems, however, offer over 95 % accuracy, a must for successful forex trading.
- Technology: Free systems usually do not have the latest technology that offers great performance and speed. The best forex systems, on the other hand, utilize the latest technology that offers faster, better and more accurate performance.
So, if you too want to perform range trading successfully, the best way is to gain good knowledge of the concept and purchase a reliable trading system.
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