Best Range Trading Strategy For Forex Beginners

In this post, you’ll learn a simple range trading strategy.

Range bars can help us identify support and resistance levels with the precision of a surgeon.

That explains why this is the best range trading strategy.

Once we have identified the support and resistance level, we let the market do his thing

Note* For the purpose of this range bar strategy we’re using a range bar size of 5 pips. This means each bar is printed once we traveled at least 5 pips in one or the other direction.

Once the resistance level is tagged by the range bar we wait for price formation that includes 3 countertrend bars.

You just need to open a new position when the fourth bar is printed on the chart.

The three consecutive countertrend bars simply show range expansion trading.

This is a clear shift in the trend direction.

Let’s zoom into the previous chart:

The protective stop-loss order can safely be placed above the 3 range bar pattern. Stop losses are one of the most effective ways for traders to control their exposure to risk.

Let’s now learn how to trade range bars using indicators.

We’re only going to use the MFI (Money Flow Index )indicator.

Through this range bar trading strategy we’re going to use the MFI indicator to confirm the buying and selling pressures behind the range bar expansion.

For example, when the range bar expands on the upside, we want to make sure this is due to buying activity.

We’re just using the MFI indicator as a confirmation tool.

See the range bar chart example below: