Does range trading really work in Forex? It can, depending on how you use it. There are several different ways to define this term in Forex trading. First, there is the simple definition, where a trader sees a trade that looks good, and makes the purchase at the time that seems best to make a profit. The second way to define this term is by trading at minimum and maximum price ranges in any given period of time (be it a week, a month, etc.). Usually, people using this method make their purchases at the minimum end of a range of prices that work for them. They then sell at the maximum end of their trading range.
If you are going to use range trading in your Forex trading strategy, there are a few things you need to know. First, you need to be able to accurately identify the power of your range. The power is dependent on the time frame. The more time the trading range is given, the more likely it will be to continue with the same level of force. That is why shorter trading windows are best, as you can be more sure that trading trends will continue for the short term than the long term.
You also need to know the best time to enter the trading market. There area number of different analytical tools available that can help you make this determination. You want to be sure you are entering the market when prices are lowest, and exiting when they are highest. Because Forex markets move very fast, it is important to keep on top of things, which can mean constant monitoring of the markets, or purchasing robot software to keep an eye on things for you.
Finally, you should know how to use the Average Directional Index. This will help you determine if a particular currency is within purchasing range or not. It is a good tool to have on hand.
If you become familiar with these aspects of Forex trading, you really stand a good chance of making a lot of money. Those who do well in Forex make significant incomes. It just takes some skill and practice and a bit of luck to be able to make good trades. Knowing when to make the trades is key in Forex trading success. You'll want to make use of range trading, since it is very beneficial in making these determinations. However, you will also want to make use of a variety of other tools for analyzing the market. The more tools you have at your disposal, the better choices you will make in your Forex trading, and the more wealthy you will become.