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Chapter 19, Part III. Ranging Market by Indicators. Page 3

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Commander in Pips: Yep. And what is a major idea in a ranging market?

    Pipruit: While price moves with in some range, trader hopes to make money, if he/she buys near the bottom and sells near the top and vice versa.
    Commander in Pips: Right. So the last indicators that you have to tell me about are oscillators.

    Applying oscillators in a ranging market

    Pipruit: Ok. As we know oscillators are normalized indicators in 0-100 range. RSI and Stochastic are the most widely known among them. In a ranging market they will work well, giving us signals, according to classical rules, that we’ve discussed in the corresponding chapter dedicated to them.​

    Chart #3 | 5-min EUR/USD and Stochastic (8;3;3)

    Pipruit: Combining of oscillators with other tools could help to determine zones for Sell and Buy action with more precision, because they turn to oversold/overbought conditions there.​

    Commander in Pips: Well that’s right. Also, it makes sense to note here that it’s better to apply range trading strategies with crosses. For the long term very suitable for that purpose were EUR/CHF and EUR/GBP pairs. But due to some turmoil on financial markets, demand for safe-haven CHF increased significantly, so EUR/CHF has turned to solid downward trend. Still, in a calm environment, when the crisis will end, these pairs will again become attractive for range trading.

    So, we’ve met with trending and ranging markets. Still, as I’ve said in the beginning, applying indicators for identification what market currently stands is a not simple task to do. The big problem with that is a problem as a chained circle. From the one point of view you apply, say, oscillators on a ranging market. From the other point – they have to tell you that this is a ranging market. That’s why I suppose that a harmonic approach is better. Still, this is a classical theory and we have to know it as well.

    P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them on the next page and Sive should answer soon.

    Note: FPA ranks are earned in the battles against scam, not in the classroom.
    #1 Sive Morten, Dec 21, 2013
    Lasted edited by : Apr 19, 2016
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