Range Bound Market: Forex Trading Strategy

Not so many trading strategies are multipurpose. ‘Range bound Market’ strategy is one of the rare techniques, allowing not only trading in sideways ranges but also using it in scalping and intraday trading.

Range trading is quite a simple method based on standard technical indicators: Stochastic Oscillator and Parabolic Sar. The strategy can be used for different market conditions as well as several trading approaches such as scalping for instance.

This trading system is suitable for any currency pair. The only requirement for the asset to trade on is the minimal spread, which is crucial for the scalping profitability. The best timeframes are M1 and M5. It is always important to choose the right time for profitable trading due to the different volume and volatility periods. London and New York trading sessions are the most suitable periods for the ‘Range bound Market’ forex trading system.

Risk management warning: the lot size has to be chosen with consideration of the key money management rule - not to exceed 2-5% of your account balance in one single deal.

The settings for the indicators listed above have to be changed to ‘5,5,5, close’ for the Stochastic Oscillator with oversold and overbought levels at 25 and 75 respectively. Parabolic Sar parameters have to be set to 0.04, 0.1.

Install Range bound Market indicators and the system template:

  1. Unpack the archive with templates and indicators;
  2. Copy the indicators and paste them in MQL4 - Indicators folder;
  3. The templates have to be pasted in the appropriate folder;
  4. Reload the terminal;
  5. Open the chart of any currency pair chosen;
  6. Install the template with the name ‘Range-bound Market Binary Strategy’.

Trading signals for LONG positions are as follows:

  1. Both lines of the Stochastic Oscillator cross the 25 level from downside up;
  2. Parabolic Sar indicator’s dots are above the current price.
Range Bound Market

Trading signals for SHORT positions are as follows:

  1. Both lines of the Stochastic Oscillator cross the 75 level from upside down;
  2. Parabolic Sar indicator’s dots are below the current price.

The stop-loss orders have to be placed below/above local bottom/top depending on the trend direction. The take-profit orders are set for 50 pips from the entry point (five-digit quotes)

‘Range bound Market’ forex trading strategy has simple rules which would not cause any difficulties even for beginners.

Experienced traders can update the settings of indicators in order to increase the method’s efficiency and functionality.

It is recommended to open deals with accordance to the general trend which can be determined on longer timeframes.

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