Trading Range Bound Markets

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Trading Range Bound Markets
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FX-Markets tend to occur

• Currencies rarely move to a great extent,
  normally no more than 5-10 cents a year.
• Capital is constantly moving out of one currency
  and into another, just as water always looks for
  the lowest point.
• Eventually a currency (pair) will find its
  equilibrium price, as the buyers and sellers
  smooth out the choppy trading activity.
• Therefore traders should anticipate a regression
  to the mean as the market has a tendency to
  returns towards the middle of its trading range.

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Step 1 Identify the recent high and low prices
over a given period of time.
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Step 2 Initiate a trade as close as possible to
recent high and low prices resistance and
support.
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Step 3 Protective stops should be placed below
support and above resistance with a generous
amount of breathing room.
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Step 4 Take profits as the market returns
towards the center of its trading range.
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Trading Tip 1 Stagger stop orders to prevent
losing the entire position upon one market spike.
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Trading Tip 2 Stagger limit orders to take
profits along way and capture profits when they
exist.
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Trading Tip 3 Stagger entry orders to add to
existing positions at a better cost basis.
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Trading Tip 4 Always note the carry or
difference in interest rates. It may be wise to
trade only in the same direction of an obvious
trend.
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Trading Tip 5 If support or resistance is
broken, we must exercise caution as a new trend
may develop.