Are You Still Making These Range Trading Mistakes?

Are you still making these range trading mistakes? Majority of traders always have the sense of urgency to get involved into a position, which is a trait you need to avoid at all cost. Successful traders spend 90% of their time thinking, 10% of the time taking action. Trading in a range bound condition sounds easy, especially if you are referring to the textbook stuff. But range trading in live market condition varies every time. Believe or not, majority of new traders tend to give back all of their hard earned profit by over-trading/ revenge trading during a ranging market condition, it's never just about making money but to preserve your profit. These are some of the mistakes and solutions, hopefully to give you some clarity and to master range trading, making the most out of it.

1. Sense of urgency - Refer to the chart above, before the dotted black line no one has any idea the market is going to range across, this is when you must take a step back and re-assess the market condition. Let the market do whatever it wants until you have a clue about it.
2. Trading the continuation pattern - One of the biggest mistakes I realize new traders constantly make is trading the continuation pattern during a range bound condition (Eg. flag, pennant , etc.). Yes, indeed sometimes it might works, but think deeply about the concept & purpose of an exhaustion pattern, it is to catch the fresh momentum after a temporary pause in the market. Why would you take momentum patterns within a range, when buyers & sellers are clearly agreed upon certain price range? It simply doesn't fulfill the risk-to-reward in your expectation.
3. Misuse the candlestick patterns - Candlestick patterns only work when you use in the right context. Imagine you taking a short just because there's a bearish doji in a parabolic uptrend, does it make sense? Avoid overthinking about candlestick patterns, it simply tells you what happened within the time period. Always utilize it correctly.
4. Fail to identify the area of value - The most important thing about range trading is identifying the area of value ( support & resistance zone). Identify where you think you could safely lean your SL against, and have a realistic target.
5. Chase the breakouts - In the live market, there'd be tons of spikes near the support & resistance zone, avoid chasing them to prevent unnecessary losses.

1. Trade the higher timeframe - During a range bound condition, personally I would avoid trading the lower timeframe (1min - 15min charts). Simply because a breakout on the lower timeframe could be a regular wick rejection on the 1h chart, avoid going down to lower timeframe especially if you are an aggressive trader like myself.
2. Pending order - Identify area of value where you'd like to get involved in the market, place a pending order, allow the market to come to you instead of you chasing it.
3. Widen your SL & realistic target - During a range bound condition, it is always safer to have your SL at a sensible place and have realistic target. You cannot expect to have a 1:5RR trade in a range bound condition, avoid being greedy.

Trading is never easy, but being patient allows you to have a calm mind to read the market. Trade safe.

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Thanks for sharing another great education post! Patience is always important. We're excited to read the comments & feedback.
+17 Reply
TraderNeoh TradingView
@TradingView, Cheers!
+4 Reply
Thanks for this great graphic :)
+1 Reply
TraderNeoh CoreySurles
@CoreySurles, Glad it helps!
Excellent advice.
+1 Reply
TraderNeoh romowest
@romowest, Appreciate it.
3. is so important, and more generally, candlestick patterns are really only for trading reversals/exits and not entries
+18 Reply
TraderNeoh GingerTea
@GingerTea, Great comment.
+3 Reply
I fuck up all the time
+10 Reply
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