Stocks & Commodities V. 36:04 (60–62): A Range-Bound Strategy by Solomon Chuama

A Range-Bound Strategy by Solomon Chuama

Markets move in trends and markets move in trading ranges. Looking at any chart makes it plain to see that a trader can make money during trends, but we shouldn’t rule out the possibility of making successful trades during trading ranges. Here’s how one forex trader does it.

A range is when there’s a series of prices marked by a high and low level. Ranges occur as a result of buyer and seller indecision. Neither group is able to push the price of a currency pair beyond the high and low point or resistance and support levels, respectively. This is known as a range-bound market. It is possible to trade a market when prices oscillate between these levels, if there’s enough distance between them. But if a ranging market is choppy, it’s not worth trading. A choppy market consolidates tightly and the distance between the levels is not enough to allow for a good risk–reward ratio ...