Forex beginners often hear that they should trade in line with trends in the market. And it makes sense. But what if the market is not trending? Sometimes the movement may be in a certain range within a few months. How to make money then?
The good news is that the range, created within the market, it is nothing more than support and resistance levels, between which lies a market movement. The market is not in a range
Thus, the trading range can be very good in terms of trade, it lets you know where to buy and sell. You sell when the price bounces off the resistance level and buy when the market value bounces from the support. Obviously, the more time the market reached but did not break the level, the more the trader is assured that the movement will remain within the range.
How many times should the price bounce off the support and resistance levels before you should consider the market in the range? Some traders believe that, at least two times. More conservative traders would say that three times. It depends on how conservative you are aiming to be in the forex trading.
There are other opportunities for trade in a range that does not require you to wait until the price hit the upper and lower region of the range. Some traders separate the range field horizontally into four equal parts. Every time the price reaches the upper or lower quarter, they begin to look for other signs that the market is going to turn around. Why?
Because the market is not a time will unfold till it reaches the containment of a range level. It would be too risky to trade just because the currency has reached the top and bottom quarters, but if other indicators suggest that the market is going to turn around, it is worth considering that possibility.
If you traded within the market, where will you mark your stop-loss? Definitely, it will be out of the range. Thus, if the stop-loss worked, you will know that this happened because the market went out of range.