I Made $10,000 Monthly With Position & Range Trading Strategy

I Made $10,000 Monthly With Position & Range Trading Strategy

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  1. Position trading

is a strategy in which traders hold their position over an extended time period—anywhere from a couple of weeks to a couple of years. As a long-term trading strategy, this approach requires traders to take a macro view of the market and sustain smaller market fluctuations that counter their position.

Tools Used

Position traders typically use a trend-following strategy. They rely on analytical data (typically slow moving averages) to identify trending markets and determine ideal entry and exit points therein. They also conduct a fundamental analysis to identify micro- and macroeconomic conditions that may influence the market and value of the asset in question.

Pros and Cons

The success or failure of position trading hinges on the trader’s understanding of the market in question and their ability to manage risk. To lock in profits at regular intervals (and thereby mitigate potential losses), some position traders choose to use a target trading strategy.

 

2. Range Trading

Range trading is based on the concept of support and resistance. On a price action graph, support and resistance levels can be identified as the highest and lowest point that price reaches before reversing in the opposite direction. Together, these support and resistance levels create a bracketed trading range.

In a trending market, price will continue to break previous resistance levels (forming higher highs in an uptrend, or lower lows in a downtrend), creating a stair-like support and resistance pattern. In a ranging market, however, price moves in a sideways pattern and remains bracketed between established support and resistance thresholds.

When price reaches the overbought (resistance) level, traders anticipate a reversal in the opposite direction and sell. Similarly, when price approaches the oversold (support) level, it’s considered a buy signal. Finally, if price breaks through this established range, it may be a sign that a new trend is about to take shape. Range traders are less interested in anticipating breakouts (which typically occur in trending markets) and more interested in markets that oscillate between support and resistance levels without trending in one direction for an extended period.

Tools Used

Range traders use support and resistance levels to determine when to enter and exit trades and what positions to take. To do so, they’ll often use banded momentum indicators such as the stochastic oscillator and RSI to identify overbought and oversold conditions.

Pros and Cons

Trading the dips and surges of ranging markets can be a consistent and rewarding strategy. Because traders are looking to capitalize on the current trend rather than predicting it, there is also less inherent risk. That said, timing is exceptionally important. Oftentimes, an asset will remain overbought or oversold for an extended period before reversing to the opposite side. To shoulder less risk, traders should wait to enter into a new position until the price reversal can be confirmed.

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