News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Bullish
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
GBP/USD
Mixed
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The Federal Open Market Committee (FOMC) Minutes may drag on the price of gold as the central bank appears to be in no rush to switch gears. Get your market update from @DavidJSong here: https://t.co/2EvNplObIk https://t.co/hhEAnqhAEu
  • There’s a strong correlation between interest rates and forex trading. Forex is ruled by many variables, but the interest rate of the currency is the fundamental factor that prevails above them all. Learn how interest rates impact currency markets here: https://t.co/J0EPMD2Cfi https://t.co/gNiVpWrd1p
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/BdgFmkRxVw https://t.co/4zEwS7mFJE
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/nB2f5m56nq
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/9S5tXIs3SX https://t.co/Q0yRRpMpPX
  • Emotions are often a key driving force behind FOMO. If left unchecked, they can lead traders to neglect trading plans and exceed comfortable levels of risk. Read on and get your emotions in check here: https://t.co/eILWbFgHRE https://t.co/pSeSiNnmHe
  • There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Learn about the characteristics of each session here: https://t.co/reRmDe1Ksp https://t.co/iVOEuK40rn
  • Implementing a trading checklist is a vital part of the trading process because it helps traders to stay disciplined, stick to the trading plan, and builds confidence. Learn how to stick to the plan, stay disciplined, and use a checklist here: https://t.co/SQUCCYRCIk https://t.co/ltEO5dpKux
  • WTI crude oil is currently trading up against major resistance via the 2019 and 2020 highs within the confines of a channel; something has to give. Get your market update from @PaulRobinsonFX here: https://t.co/MO9foRjm2y https://t.co/YhBFdvZDEb
  • The Dow Jones and S&P 500 outlook appears bleak in the near term as retail traders increase their upside exposure. At the same time, these indices confirmed bearish technical warning signs. Get your market update from @ddubrovskyFX here:https://t.co/fKCHELbOxo https://t.co/eVDwmFTaIg
The 3 Step No-Hassle Range Trading Strategy

The 3 Step No-Hassle Range Trading Strategy

Rob Pasche, Forex Trading Instructor

Talking Points:

  • Low volatility opens the door to use range trading strategies.
  • Pivot levels automatically give traders support and resistance levels to trade from.
  • Stops and limits can both be set using pivot levels.

With the slow market conditions we have been seeing lately, trend strategies and breakout strategies have had a difficult time turning a profit. The strategies I have been running that made money from 2011-2013, have really struggled to keep their heads above water during 2014. So I’ve been on the lookout for ways to efficiently trade low volatility periods of time using range based strategies.

Today, we are going to cover a range strategy created specifically for current market conditions we are facing.

Step 1: Look for Low Volatility

As mentioned above, range based strategies work best in low volatility periods of time. So, our first order of business is to find the pairs that have shown the least amount of volatility. While we can “eyeball” a chart and decide which ones are moving the least, we prefer using DailyFX’s Technical Analysis page.

Learn Forex: DailyFX Technical Analysis - Volatility

The 3 Step No-Hassle Range Trading Strategy

(Copied from DailyFX.com’s Technical Analysis page)

The image above shows volatility highlighted in red. A 0% reading means a pair has shown almost no volatility while a reading of 100% means the pair has shown an extreme level of volatility. For the purposes of range trading, we recommend a reading of 25% or lower. So we need to make note of each pair with volatility below 25% before we move on to our charts.

Step 2: Find Trade Entries Using Pivot Levels

Pivot levels are one of the oldest forms of technical analysis. They were actually used by floor traders to easily keep track of important price levels before price charts became more readily available. Fortunately for us, we do not need to calculate these levels ourselves. We can add pivot levels with a few clicks of our mouse on a Marketscope chart. To add them, right click on your chart and select “Add Indicator.” Then choose “Pivot Levels” and click OK. We will use the default settings.

Learn Forex: Pivot Levels on a Marketscope Chart

The 3 Step No-Hassle Range Trading Strategy

(Created using Marketscope 2.0 Charting Platform)

Our chart should now look like the one above, a single gray line with multiple green lines and red lines above and below. These lines will act as our trigger for placing a trade and for setting stops and limits.

Step 3: Entering and Exiting Using Pivot Levels

We need to identify the lines by their proper names. The gray line is called the “pivot” and is in the middle. The green lines above are resistance levels named R1, R2, R3 and R4 with the smaller numbers closer to the pivot line. The red lines below are support levels named S1, S2, S3 and S4 with the smaller numbers closer to the pivot line. Any of these lines can cause price to bounce.

For our entry, we are going to wait until either S1 or R1 are hit. If S1 is hit, that is a buy signal. If R1 is hit, that is a sell signal. The idea is that if markets are ranging, then they will snap back towards the mean if they move too far in one direction or the other. The chart below displays a classic buy signal when price hits S1.

Learn Forex: Buy Trade Setup - Using Pivot Level Range Trading

The 3 Step No-Hassle Range Trading Strategy

“…If S1 is hit, that is a buy signal…”

Once the buy trade is placed, we set our stop loss at S2, with profit targets at the pivot and R1 levels. Using these exit levels should automatically follow our Money Management rules.

In a situation where price reaches the R1 first, this would trigger a sell trade with a stop loss at R2 and profit targets at the Pivot and S1. Effectively, the inverse of the chart shown above.

Home, Home on the Range

When using the correct tools, we can trade any market. And when it comes to trading markets with low volatility, pivot levels are an easy way to open and close range-based trades.

Good trading!

---Written by Rob Pasche

Want to trade like a professional? Click here to take a free Video Course to help get you there.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES