Trading system based on price ranges


Possible and the option argument if the price went out of range, but he soon returned to it, then it means that a break (trend) does not take place, therefore, likely to move prices in the opposite direction - a signal to open positions on return rates within the range.

Thus, the following are typical trading rules-based systems ranges.

1. In the trendy option

Trading on the out of range - opening a position in the direction of a breakthrough at the time of border crossing this intersection indicates a possible beginning of a trend, so

Enter long
Close above upper
band
Enter short
Close below lower
band

There are various options close positions. For example, out of position and opening the other, when crossed opposite border. Such a system is always in the market, opening a new position means closing (turning) of the previous (Stop & Revers system). Possible and easy way out of position, but not a coup, when reached moving average (or other middle line) between the borders.

2. Option for non-trending markets

Trade within the range when positions open at rollback prices of the range. From the top of the line open short positions on the bottom line - long. For that opened during the rollback, the opposite end of the range can often serve as a natural reference point for recording revenue. The distance between the boundaries of the range must be large enough to take profits. The criterion to select the option (whether to sell out of range or inside) can be, for example, a trend indicator (ADX, MACD, etc.).

3. A counter option

Opening position after leaving the band, but in the opposite direction to this output (provided that the range at that time apart from each other at a sufficient distance). Since the range contains the bulk of the market movement, then the non-trending market out of it is likely to signal a quick return, so

Enter long Close below lower
band
Enter short Close above upper
band

Way out of position - when the opposite of the channel. Next, we consider some approaches that use these ideas in the trade price ranges. The main differences between the approaches is in how they are understood in the range. These trading rules by themselves are useful in conjunction with the boundaries of any construction. The choice of an option is determined primarily by market dynamics.

A break open position limits based on the continuation of the course, which is typical trend trading systems. When you roll back prices of frontiers within the range open positions in systems focused on non-trending markets, or systems of against.

But to a large extent determined by the choice of trade rules and the device of the range. The figures show two examples of different trading logic, and suggest that all bands can be in this respect are two types of wide ranges and narrow ranges. Wide ranges contain the bulk of price movements (range 2.0 Bollinger with a parameter contains more than 95% of the price) between sufficiently distant from each other's boundaries.