An Introduction to Range Trading

Volatility is the nature of cryptocurrency which you have to accept before jumping into the market as anything can happen. It is sad to say that the bull market has come to an end, and we are in a bear market trend which you have to be cautious of whatever you do. Many believe trending markets are common, whereas some also don't believe which in this post will be discussing range trading.

---

Range Trading

Whether you call it trading range or range trading it doesn't change the meaning as they're both the same thing. This means the price area in which cryptocurrencies have repeatedly traded up and down and the resistance level is the top of the area that is called the range high, which is controlled by sellers. The support level which is the range low is controlled by buyers.

Tradingview

Dominant is what trading ranges usually begin after a price where the price of the assets has moved up and down for a certain period it will then allow the market to cool off for some time before it begins again. For instance, after an asset has moved strongly for some time, the price of the asset will then spend some time in a rangebound area, waiting for the next moving average to meet up with the price.

One good thing about trading ranges is the opportunities that are offered to traders when new market trends begin and not only when the market is moving inside of the range. Most traders use range trading to know when the price will break out of a range so they can enter the market long.

---

How to Trade Range

The trading range market is far beyond buying and selling assets at the range move up or down. Most of the time it doesn't matter if you buying or selling at the range extreme, what is most important is for you to combine volume, with the indicator so you can analyze better.

You can enter and exit the market around the extreme range when the indicator you are using to analyze the market is moving in line with the range which will make you more confident in the market.

Tradingview

For instance, as a range trader you can open a position on the liquidity grabs as shown in the above screenshot which is indicated in the red circle, and take a short position when the liquidity is taking upside and a long position when it is taking downside as indicated in the chart above.

If you are trading on a range market you need to take your risk management very seriously to protect your capital from being liquidated as a breakout that marks the start of a new trend can come out at any time.

---

Breakout in Range Trading

Tradingview

Breakout usually occurs in a range trading when the market momentum has built up in a way that the market can push the price of the asset through the levels of support and resistance.

Breakout is normally used when it comes to trend trading, even a rangebound market, you have to understand where the price of the asset is going first, whether it is ll breakout from the resistance or support levels.

As a trader, this will allow you to take advantage of a new trend. In addition to this, if you want to enter the market, it would be nice if you place your stop loss at or immediately after a support or resistance level to reduce your losses in case a breakout happens.

---

Disclaimer

_{All that has been shared here is based on my understanding of range trading and on the research that I did before putting down this post, which you are to treat as educational content and not as investment advice.}

Reference