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Range Trading

Range Trading

Range trading is a type of trading that seeks to take advantage of price consolidations, also known as “ranges”. This type of trading typically occurs when the market is trading sideways, without any clear direction. In a range-bound market, prices will move back and forth between two levels. To be considered a range, these two levels (support and resistance) must be tested numerous times. Ideally, range traders buy near the bottom of the range and sell near the top of the range. Stochastic oscillators, RSI, Bollinger bands, pivot points, and Fibonacci levels are some of the indicators employed. Range trading is preferred in quieter markets since there is less dramatic price movement, allowing traders to capitalize on tiny bounces inside the range.