Free Forex range trading systems should not be very difficult to come by. First let’s start off with a few different strategies used to trade ranges.
The first range trading system would be trading using support and resistance. This could also quite easily be done by defining a range using a channel. A channel is simply a set of 2 horizontal lines drawn on your chart. The top part of the channel is created using the highest high of the last X number of periods where X can be any whole number. The bottom part of the channel is created using the lowest low of the last X number of periods. For example on a daily Forex chart a 10-day channel can be created by drawing the top part of the channel using the highest high of the last 10 days. For the bottom part of the channel we simply use the lowest low of the last 10 days.
To trade using these channels we would sell when the price of our chosen currency pair reaches the top part of our channel and we would buy when the price reaches the lower part of our channel. In this type of range trading system we are actually countertrend trading because we are selling when themarket is moving upward and buying when the market is moving downward.
A better way to range trade in the above scenario might be to let the price move above the upper level and then sell if and when the price moves back down into the channel’s range. The reverse would be true of initiating a buy trade. This strategy has built in confirmation that the market is indeed moving in the direction that we wish to trade in.
Although many may not consider a channel breatout trade to be a range trade in reality it is. This is because the trade is taken in the direction that the price “breaks” through the upper or lower level of the channel. This is an extremely effective method of trading.
So we have covered a few examples of a few free Forex range trading systems. You can easily experiment with these using your own Forex charting software to create range trading systems that fit you to a tee.
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