Tuesday, February 5, 2013

Trading narrow ranges

If you love trading trends and fading large trading ranges, the kryptonite for you is a tight trading range. Scalpers and faders however, can do well in such a market.

When you sense the market may be trending, i.e., higher highs and higher lows or lower highs and lower lows(b15-29, b29-35), you can attempt to trade with the trend. However, if the bars suddenly turn into dojis (b36-38) or turn into overlapping sideways bars (b43-60), you should stop trading.

A versatile trader can switch between trend trading and fading and trade any such day but such a trader has to first master both techniques individually before attempting to interleave them in the same trading day.

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