What Is Range-Bound Trading ?
Range-bound #strategies refer to methods by which traders capitalize on a market that’s moving sideways — also known as a sideways market. For example, users trading in sideways conditions will repeatedly buy an asset low at the resistance level, and then sell it high at the support level.
Crypto traders take advantage of sideways markets by identifying the major #support (low price) and #resistance (high price) levels. Assets at the support level trend line offer an optimal chance to buy low, while #traders sell high when assets reach the resistance trend line. This area where prices oscillate back and forth is called the #range, also known as the price channel.
Let’s say an #asset has routinely moved between $23,000 and $25,000 over the past few days. Traders using a range-bound strategy would buy the asset at $23,000 (support) and sell the asset at $25,000 (resistance).
The upside is significantly lower than timing a #breakout but markets don’t permanently trend in one direction. Sometimes, the market will pause and move #sideways before continuing its prior trend. On the other hand, the market may be in a period of indecision before the #opposition forces a reversal.
Range-bound #strategies refer to methods by which traders capitalize on a market that’s moving sideways — also known as a sideways market. For example, users trading in sideways conditions will repeatedly buy an asset low at the resistance level, and then sell it high at the support level.
Crypto traders take advantage of sideways markets by identifying the major #support (low price) and #resistance (high price) levels. Assets at the support level trend line offer an optimal chance to buy low, while #traders sell high when assets reach the resistance trend line. This area where prices oscillate back and forth is called the #range, also known as the price channel.
Let’s say an #asset has routinely moved between $23,000 and $25,000 over the past few days. Traders using a range-bound strategy would buy the asset at $23,000 (support) and sell the asset at $25,000 (resistance).
The upside is significantly lower than timing a #breakout but markets don’t permanently trend in one direction. Sometimes, the market will pause and move #sideways before continuing its prior trend. On the other hand, the market may be in a period of indecision before the #opposition forces a reversal.