Podcast

Range Trading

Range trading is a trading strategy that identifies stocks trading in channels. By finding major support and resistance levels with technical analysis, a range trader buys stocks at the lower level of support (bottom of the channel) and sells them near resistance (top of the channel).

I can remember watching the oil market over the course of several weeks. It was going up to a point and then falling back down every morning between 1:00 AM and 3:00 AM. The swings were thousands of dollars every night. I got in at 1:00 am and it went up. Just when it was starting to fall I got out. It worked like clockwork. The problem was that I did not have a system and I eventually gave it all back. That was my first introduction to range trading. We do not use range trading in our trading system but we realize that it is a type of strategy that can be used in trading systems.

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