Range Trading

The characteristic “pitchfork pattern” is very common in forex and in other charts. So this is a method that has great practical application.

All serious money managers know that the smart money is made not when the market is stable but when the market goes through a sudden state of change. Take for example, the end of a bull run or the imploding of an asset bubble.

Range trades can be an effective strategy but detecting and analyzing them is a major challenge. This article describes a strategy for trading ranges using adaptive linear regression channels.

The idea behind this scalping strategy is to catch the short wave retracements that take place when the market reaches a peak overbought or oversold state. It is best applied to ranges.

Range trading is a simply yet powerful trading technique in forex. It complements a number of other strategies such as trend following and breakout trading but many use it successfully on its own.

Pivots are a tool often used by range traders and day traders to work out likely reversal points based on the previous day’s price activity. The beauty of pivots is their simplicity.