Range trading is a strategy where traders analyze charts to identify key support and resistance levels. These levels help determine when an asset is likely to move up or down. Support refers to a price level that the asset typically doesn’t fall below, while resistance is where the upward movement tends to halt.
In this approach, traders pinpoint a range within which the asset price fluctuates. When the price hits the lower boundary (support), a trader might consider buying, while reaching the upper boundary (resistance) could signal a selling opportunity. Effective risk management is crucial here, as misjudging the price direction can lead to significant losses. Success in this strategy demands a solid grasp of market trends and precise timing for entering and exiting trades.