How to trade a ranging market

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Posted by on Tuesday December 6, 2011 10:3:1:

Range trading has to do with trading when charts show a sort of zig-zag pattern. This is when there is no clear trend upwards or downwards. It is neither going totally down or totally up, just ranging. How do you trade charts or markets like that?

There are certain things to consider when you want to trade in such markets:
- Price range is close
- Price changes are small
- Prices are constantly changing
- It is mostly short term

I've found out that prices tend to start ranging when there are no serious external factors affecting them like news reports or market movers. They tend to be only slight movements depending on the volatility of the paired currency.

You shouldn't trade ranging markets the same way you trade trending markets else it would affect you negatively. People who trade ranging markets do it only for the short term. Range trading is for short term trades while trending markets are for longer term trades.

With ranging markets or charts, there is no specific market direction so how do you trade it?

Simply set your chart to shorter time intervals - like 15 to 30 mins
Find the support and resistance levels
Make use of buy stops to enter at lows and exit at resistance levels
You may also make use of sell stops to enter at

Most scalpers tend to make a lot of profit from just range trading as they use a higher amount of capital to monetize from small pip movements. With range trading, one could even make over $100 from just a 10 pip movement.

Here is an example of how much you can make from short term rang trades

Currency: EUR/USD
Target: 10 pips = 0.0010
QTY: 100,000
Entry price: $1.3450
Exit price: $1.3460
Position: Long
Profit: 100,000*0.001 = $100

Assuming you set up such a position and it closes in your favour, you would have gained $100. You should also consider other things like setting up a good stop loss pt and money management rules

Re: How to trade a ranging market Posted by micheal d abbe on Tuesday December 6, 2011 at 21:25:30:

if i have 100 U S D how many pip can i open

Re: How to trade a ranging market Posted by Felix on Tuesday December 6, 2011 at 21:25:30:

You can earn as many pips as you want but you still would need to follow some rules such as:
- Good money management eg risk only 2%
- Good risk:reward ratio eg 1:2

So assuming you trade with $100. 1% of that would be $1 so you should only risk about $1 per trade and then using a 1:2 ratio, you could reward yourself with $2 for every $1 risked. Try this many times and if you get more wins per day, you would be in business.

So assuming you buy EU using this setup:

Stop loss: 20pips
Target pip: 40 pips
Units: 500 units = (40pip/$2)

So assuming you buy eu at 1.3500 and target 1.3540, if it hits the target you would earn 0.004*500 = $2. If it goes lower to 1.3480, you lose 20 pips and that would be $1.