Range market (sideways chart) about

Hello, this is Capital Kids! Today I’ll explain range trading in an easy-to-understand way.

What is range trading?

Range trading is a market where prices move up and down within a certain range. This range is called the “range.” Prices bounce between the upper limit (resistance) and the lower limit (support).

Characteristics of a range market

1. Upper and lower bounds:
   • Resistance (upper bound): A point where prices rise but do not go higher.
   • Support (lower bound): A point where prices fall but do not go lower.
2. No clear direction:
   • In range trading, since prices fluctuate within a set range, there is no clear uptrend or downtrend.

Trading strategies in range markets

1. Sell near the upper bound of the range:
   • When prices approach resistance, it’s common to take a short position.
2. Buy near the lower bound of the range:
   • When prices approach support, it’s common to take a long position.
3. Aim for a breakout:
   • If the range continues and prices break out of the range, a big trend can begin. There are trading methods that aim for this breakout.

Cautions

• Fakeouts: Sometimes even after a breakout, prices return to the original range quickly. This is called a fakeout. Be wary of fakeouts and set clear stop-loss levels.

Summary

Range trading refers to prices moving within a defined range. The basic strategy is to sell at the upper bound and buy at the lower bound, but you can also target breakouts. When trading, be mindful of fakeouts!

Next time:

・Overview of the color line tool “GJ+ LineTradeExpert”

・Using the color line tool “GJ+ LineTradeExpert” to draw trendlines