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.