Range trading (mean reversion)

What it is

When a market moves sideways between clear support and resistance, it tends to keep rotating between them. Range traders buy near support and sell near resistance, expecting price to revert to the middle or the other side.

How to spot it

• At least two clear touches on each side.
• No strong trend on the higher timeframe pushing it to break.

How to use it

• Buy near support with a stop below it; sell near resistance with a stop above it.
• Take profit at the middle or the other side; stop trading the range once it breaks.

Common mistakes

• Fading a breakout because 'it's a range' after it has clearly broken.
• Trading the middle of the range, where the risk-to-reward is worst.

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