I mentioned in my previous article that the height of the range is significant. A 20 pips height of the range is not worth trading, since the potential risk should be higher than the potential profit. While, of course, a 200-pip can offer good opportunity worth trading.
Let’s get to the point and talk about how to actually apply this Forex range trading strategy for some pips.
Range, if using technical analysis, is determined by the resistance and support levels. Ways to determine support and resistance levels vary. Despite the traditional approach of drawing lines according to historical lows and historical highs, dynamic approach is also gaining popularity. Bollinger bands can measure support and resistance dynamically and is therefore widely used by Range Traders.
In trading ranges where upper and lower bounds cannot be precisely defined, Bollinger Bands is very useful. With the use of Bollinger Bands, however, a range trader should also monitor the slope of the
simple moving average running through the middle of the Bands to
ensure that it is indeed flat or near – flat. That’s to ensure that a horizontal range is in place.
simple moving average running through the middle of the Bands to
ensure that it is indeed flat or near – flat. That’s to ensure that a horizontal range is in place.
Besides the dynamic range identification, Forex indicators like Stochstic and RSI can also be used to identify ranging opportunities. Stay with to figure out how to use oscillators to identify the Ranges.
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