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Best Range Trading Strategy
In this section, you’ll learn a simple range trading strategy.
Range bars can help us identify support and resistance levels with the precision of a surgeon.
That explains why this is the best range trading strategy.
Once we have identified the support and resistance level, we let the market do his thing
Note* For the purpose of this range bar strategy we’re using a range bar size of 10.00. This means each bar is printed once we traveled at least 10.00 in one or the other direction.
Once the support level is tagged by the range bar we wait for price formation that includes 3 countertrend bars.
You just need to open a new position when the fourth bar is printed on the chart.
The three consecutive countertrend bars simply show range expansion trading.
This is a clear shift in the trend direction.
The protective stop-loss order can safely be placed above the 3 range bar pattern. Stop losses are one of the most effective ways for traders to control their exposure to risk.
Let’s now learn how to trade range bars using indicators.
We’re only going to use the MFI indicator.
For more info on how to use the Money Flow Index check TSG blog: Money Flow Index – Trading like the Banks.
Through this range bar trading strategy we’re going to use the MFI indicator to confirm the buying and selling pressures behind the range bar expansion.
For example, when the range bar expands on the upside, we want to make sure this is due to buying activity.
We’re just using the MFI indicator as a confirmation tool.
If you’re tired finding success with the traditional candlestick price chart you’ll find some value in doing some research and backtesting the range bar tool. If you’re looking for a more all-inclusive range trading strategy with an effective tool to time your entries and exit points you’re way better off using the Bar Range indicator on your current trading platform.
With the best range trading strategy, you have the ability to see the market structure a little bit more clearly. If the market doesn’t move, there are no trading opportunities. If there are no trade opportunities, then we can’t make money. The range bar tool helps us identify when a trading opportunity shows up.
Jan 23
Comment: This was an educational tutorial post
Thanks for writing this.
Reply
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