How to Learn Forex Trading for Beginners : When the market is in a state of “flat” or “ranging”, there are some traders who try to “buy at low prices and sell at high prices.” Although this may seem simple, in practice there are tricks you have to understand.
Trading Range Tools
Traders who use ranging strategies are very utilizing price patterns on charts and technical indicators as tools, to help them optimize buying or selling opportunities.
Usually, traders will identify various levels of support and resistance, to be used as a reference level for the price of buy or sell. This makes trading when the market is ranging occurs between two parallel horizontal lines namely support and resistance. In this area, traders seek profit from ranging price conditions.
Ranging Price Movement
Often the price moves between two parallel lines ( area support and resistance area ) for days and sometimes within a week before a breakout occurs.
To try to take advantage of the situation, many traders open short positions at the resistance level, or take long positions in the support area.
In addition, the stop-loss level can be above or below the support or resistance level to limit the risk that might occur and ensure that losses can be minimized if the price moves the breakout .
Ranging and Breakout Prices
The most common momentum is when the price moves a breakout with big strength and manages to break the resistance or support level. After that the price tends to move to the next movement target with the same setup as the vertical distance between the line projected from the price level before the breakout occurs.
If the breakout occurs at the top (resistance), you need to add a step by measuring the breakou level to get the profit level target.
Some traders will take advantage of these opportunities by:
- Buy in the “dip” area when prices try to move up or vice versa.
- Placing a stop loss position when prices move ranging.
- Putting the level of take profit.
For example: If the price moves a breakout then the option to open a BUY position opens. Traders will likely measure the breakout level to determine the stop loss position and take profit level.
However, it should be remembered that certain skills are needed to be able to analyze technical price movements. Therefore, regular and consistent training must be done. To try to practice this system, there’s no harm in opening a demo account first . In addition, be disciplined so that this trading system can work well from time to time.