Range trading consists of identifying a stock’s primary support (overbought) and resistance (oversold) levels and then purchasing the stock at its lower support level and selling near its higher resistance level. These levels – also known as channels – don’t constitute a specific price, but do indicate a basic range.

What Makes Range Trading a Simple and Popular Trading Strategy?

Range trading generally involves a trend movement’s price reinforcement. Once you confirm the range and know the extremes of the support and resistance levels, the stock will move in one of three ways at the extremes: break out, expand or reverse. Once the ranges change, trending starts.

On the downside, many ranges are quite narrow. That means trading such ranges offers little profit at best, when commissions are considered.

Is Range Trading a Long or Short-term Strategy?

Range trading can work as either a long-term or short-term strategy. You make the decision, based on the parameters you set for buying and selling. Stocks, and markets, can remain range bound for long periods of time.

How Can I Identify the Range?

Some, but not all, of the tools used in trend trading can help you identify the range. Use of a stochastic indicator can help you identify the range. This oscillator shows you when the security is nearing its high or low range, but helps you determine your exit and entry points. Another popular oscillator, the Commodity Channel Index (CCI – which is used for securities as well as commodities – identifies the connection between the stock’s price, its moving average price for a predetermined timeframe, and any divergence in the average.

The Relative Strength Index (RSI) measuring price movement speed changes is another indicator giving you a holistic view of the trading range. Bollinger bands allow you to view oversold and overbought levels, but don’t count them on to provide buy and sell signals. However, the highly technical Bollinger bands are excellent analytical tools.

The SureTrader Advantage

SureTrader clients enjoy the most sophisticated of technical charting tools, allowing them to use the indicators most valuable to their individual strategies. Mastery and consistent use of these tools aids traders in their decision making. Top analysis is just one more example of the SureTrader advantage.

Disclaimer: All information provided “as is” for informational purposes only, not intended as a recommendation to buy or sell. Swiss America Securities, Ltd. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.
Day Trader Strategies Range Trading

Day Trading Strategies – Range Trading

Range trading consists of identifying a stock’s primary support (overbought) and resistance (oversold) levels and then purchasing the stock at its lower support level and selling near its higher resistance level. These levels – also known as channels – don’t constitute a specific price, but do indicate a basic range.

What Makes Range Trading a Simple and Popular Trading Strategy?

Range trading generally involves a trend movement’s price reinforcement. Once you confirm the range and know the extremes of the support and resistance levels, the stock will move in one of three ways at the extremes: break out, expand or reverse. Once the ranges change, trending starts.

On the downside, many ranges are quite narrow. That means trading such ranges offers little profit at best, when commissions are considered.

Is Range Trading a Long or Short-term Strategy?

Range trading can work as either a long-term or short-term strategy. You make the decision, based on the parameters you set for buying and selling. Stocks, and markets, can remain range bound for long periods of time.

How Can I Identify the Range?

Some, but not all, of the tools used in trend trading can help you identify the range. Use of a stochastic indicator can help you identify the range. This oscillator shows you when the security is nearing its high or low range, but helps you determine your exit and entry points. Another popular oscillator, the Commodity Channel Index (CCI – which is used for securities as well as commodities – identifies the connection between the stock’s price, its moving average price for a predetermined timeframe, and any divergence in the average.

The Relative Strength Index (RSI) measuring price movement speed changes is another indicator giving you a holistic view of the trading range. Bollinger bands allow you to view oversold and overbought levels, but don’t count them on to provide buy and sell signals. However, the highly technical Bollinger bands are excellent analytical tools.

The SureTrader Advantage

SureTrader clients enjoy the most sophisticated of technical charting tools, allowing them to use the indicators most valuable to their individual strategies. Mastery and consistent use of these tools aids traders in their decision making. Top analysis is just one more example of the SureTrader advantage.

Disclaimer: All information provided “as is” for informational purposes only, not intended as a recommendation to buy or sell. Swiss America Securities, Ltd. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.