In this article, we will look at Forex range trading and strategies which work and are easy to learn. Range trading is a method anyone can learn and here we will give you all the basics for trading success. Lets look at this trading method in more detail.

Range Trading Defined

The definition of this form of trading is simply a trading strategy which looks to trade sideways channels. By looking for major support and resistance levels on a chart, with technical analysis a trading range can be established. You can then look to buy at support or bottom of the channel and look to sell, near resistance at the top of the channel.

Note: Markets will spend the bulk of there time range trading rather than trend following so having an effective swing trading strategy which can buy and sell the range can increase your profits.

Valid Ranges to Trade

The more times support and resistance are tested the better and you will often find channels on your Forex trading charts which will last for many weeks or even months. The currency simply drifts up and down within the range and your objective is to simply make money this form of trading is also referred to as swing trading because you swing trading a range.

Timing in Your Trading Signals

Lets take an example of a short position and a move to resistance ( the same methodology however works in reverse on a dip to support) and how to enter a trading signal.

Watch for the market to get near to resistance and then look for a reversal to be confirmed. This can be done just using price action with candlestick charts and looking for candle reversals or you can using some trading indicators.

The most popular indicators to use are – the stochastic, the ADX, the relative strength Index or the MACD. There are many indicators you can use in currency range trading but when you pick some make sure you use no more than 3. Don't make your trading system to complex it won't improve your market timing, it will simply make your system to complex which means it will break down in real time trading.

As general trading rules:

The more overbought the indicator is when coming into resistance the more powerful the trading signal will be when prices break down on your chart.

If you all indicators you are following break down at the same time, the better the signal.

Once you have confirmed your trading signal, its time to look at money management and your profit target

Forex Money Management and Stop Loss

Your stop should be behind resistance and not just by a few trading pips! Very often when a currency turns down, it will swing back up to hit resistance take out stops just above the chart resistance and then turn down. To avoid being taken out, at the same time as the losing majority make sure, your stop is not clustered with the losing herd – give the market a little room to breathe.

When to Take Profits

You want to take your profit before a test of support. Don't wait for the support line to be tested, take profit just above this level and go flat. I would always recommend, taking your profit early and waiting to see if support holds and then looking to trade the long side.

The key to making profits with Forex range trading is not to be to greedy, so don't hold onto long. If you do this, you will that your range trading system will make far more money over the longer term than if you are tempted to hold to long.

Final Words

Forex range trading is easy to understand and learn and because the best FX trading systems are simple, its easy to learn and also, its easy to understand the logic so you can have confidence in what your doing.

When range trading don't just trade the majors also trade the cross currency pairs – the logic of the above method will work in any currency pair so look at a wide range of pairs and pick the most valid ranges and trade them.

This method of trading, can be done by anyone and if you do it correctly, you could soon be making some great profits in around 30 minutes a day. We hope YOU found these Forex range trading tips are useful and wish you profitable trading.

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