How I Made 100 Pips a Day in a Flat Forex Market
By Casey Stubbs
The Market has not shown any real direction for two weeks, it is frustrating you can”t trade or you run the risk of blowing your account. There is a strategy for such a market and that is called range trading.
When a currency pair moves in a tight range without making a trend that is called consolidation and you would need to use a specific forex strategy called range trading. So lets use example the Euro/Usd currency pair. We will see the Euro gain strength for a couple of hours but then the pair will hit a resistance and change course. Then you have the Dollar gaining strength until it hits a support level and then boom changes course. It is so difficult to read that is why this condition eats the profits of retail investors. Moving average cross overs do not work in these type of market conditions.
How can you trade in a consolidation period?
A range trading strategy is a forex trading strategy that can be applied to capitalize on consolidation periods in the market. First you identify the range that is currently taking place. Do this by drawing horizontal lines on your charts on the top and bottom of the range. Then figure the total number of pips in this range, it is best to use a range that is a minimum of 100 pips. Once you have found a good range to use then put on a 14 period RSI ( Relative Strength Index) on your charts to help you find out if the price is oversold or overbought. The RSI will be a confirmation just to add some insurance that this will be a winning trade. So the next step is to watch the price go to the resistance or support level of the current range, hit that spot and reverse.
I would do this on any chart time frame as long as it is not less than 15 min chart. The longer the time frame the stronger the pattern and better chance of a winning trade. After this when the price starts to reverse enter in the direction of the price on the open of the next 15 minute candle. This way you know the price really did turn and you won”t get beat by a fake out. Also make sure the RSI has reversed and is below 70. when enter you will set your stop at 5 to 7 pips above or below the horizontal lines you drew on your charts. You will want to take profit about 15 pips from the next line that you are headed to. Thats it, you have just learned to profitable apply range trading to your forex trading strategies.
I applied this strategy to my recent trading in the Eur/Usd currency pair this week and was able to have 2 one hundred pip profit days. Not bad for a flat non trending market. I also use specific charting software that has additional signals that increase probability that the trade will be profitable.
This one strategy has helped me increase my profits in currency trading by being able to make trades in a slow period. This strategy has also helped my clients increase the profitability in their trading. This strategy can help you also if you follow the rules and have patience. The forex market is a great opportunity to those that can govern themselves.
About The Author
Casey Stubbs is a Forex Trader that publishes a web site dedicated to educating traders for success. He has a daily trading blog, an interactive trading school, trading tutorials, articles and more. Forex Trading School His web page is Winners Edge Trading
