UltronMania

Day 20: Trading ranges. Price action ranges about 80% of the time so it’s important to know how to trade within those conditions. The remaining 20% is when the market is trending and that’s when preparation for breakouts pay out. So how do you approach this? Step 1: Identify a range. Step 2: Open a trade on one side of the range. Step 3: Open a trade on the other side of the range. Sounds simple, but heres how you can do it: Once you've identified a range (which can be done on any timeframe), there are basically 3 options when price reaches the boundaries: A) Swing Failure Pattern (SFP): Price takes out the high or low of the range but then closes back inside. You want to enter as soon as the candle closes back within the range. B) Failed auction (FA): Price attempts to break out of the range with candle closes outside the range but fails to get continuation, later closing back inside. Entry comes when you get clear acceptance back into the range. C) Break out of the range: When price truly breaks out, you can trade it with a retest of the range boundary or by trading momentum. Ideally, you want to already be positioned before the breakout happens. A range can last a day, weeks, or even months. The goal is to position yourself with a long near the bottom and a short near the top, keeping you hedged for either direction. You can always take partial profits within the range, just make sure you size appropriately. Of course, this sounds easier in theory than in reality. You can increase your success rate by adding confluence (things like TA confirmation, volume and order flow) to avoid getting stopped out unnecessarily those extra few times out of ten. Trading this way also comes with a few advantages: > You don’t need to play hero and try to predict which way the breakout will go. > It’s mentally much easier since you’re hedged in profit, you don’t have to stress about getting caught on the wrong side of a breakout.