Day trading strategies: the complete guide with all the advanced tactics for stock and options trading strategies. Find here the tools you will need to invest in the forex market

CHAPTER 8:
 
 
Range Trading or Channel Trading
ange bound strategy is also known as the average accurate range
indicator (ATR). This is one of the favorite indicators with so
many users. Range bounder strategy is an indicator that measures
volatility in the forex market. You need to know that the ATR indicator
DOES not tell you the direction of the trend. Meaning that the market value
may be higher; however, the ATR value may below. ATR indicators only
measure volatility; thus, it focuses more on the range of the candles. So as
the scope of the candles gets smaller, the indicator values will decrease.
You, therefore, need to find explosive breakout trade before. You need to
know that the market is always changing so it will move. It will run from a
period of low volatility to a period of high volatility. It will then move from
a period of high volatility to a period of low volatility. Thus a range bond
strategy is more of a cycle, and it continues. This is how the market will
move. Therefore if you have noticed that the market is in a low volatility
environment, then there is a good chance that volatility could expand soon.

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Once you have learned the circle, then it’s time to pull out your ATR
indicators by paying attention to your ATR value. Especially the multi-year
ATR low value. You will notice that there is a point when the market is
weak, and the volatility will be as well when the market breaks down,
volatility picks up. You need to note that when a market breaks down, there
may be a big move that may follow. This is a powerful trading technique
that helps understand your market.
You also need to know how to set up a proper trade loss. This is where the
trade indicator becomes so useful. Often traders will look at price rejection
level help them know how much buffer they should put as your stop loss to
prevent you from being stopped out prematurely. Once this is done, you
need to know how to ride massive trends in the market using the ATR
indicator. Get your ATR value and make sure that you use the multiple of
that value to trailing your stop loss.
An ATR indicator should also help predict market reversal. You need to
note that an ATR indicator is a potential energy tool. Thus, if you look at
the indicator and it tells that throughout the past three weeks its 300 pips,
based on the prior period. So the energy that has been stocked for a week
has been used up. Thus the market could show signs of reversing from
there. Accordingly, this value will alert you of what to expect.
Sometimes a stock will repeatedly swing between two pricing levels for a
relatively extended period of time. That is, it is trading within a range. The
range can be estimated by drawing levels of support and resistance on the
same chart.

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In the above chart, the price level of resistance is indicated by the upper red
line. The price level for support is indicated by the lower, purple line.
Ranges can last for any length of time, and can even go on for months. The
key to finding a trading range is that it lasts over a time frame that is of
interest in your particular case. Remember that trade ranges don’t last
forever, at some point there will be a breakout to the upside or the
downside, and the stock will settle in with a new level of support and/or
resistance. These are guidelines only.

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