The fact is, during well trending markets majority of Forex traders trade profitably and comfortably, but once a trend is over all kinds of problems arise: trend-following systems no longer work, frequency of false entry signals increases bringing additional losses which eat up earlier accumulated profits.

Taking into consideration that Forex market spends up to 50% time in non-trending, sideways state, the knowledge of how to deal with range-bound markets becomes vital.

What is the simplest thing we know about the range-bound market?

...Its beginning is difficult to spot. Quite often by the time we realize that the market is ranging we’ve already made few errors and paid for it.

There are various strategies that tell how to trade during range-bound markets, but there are few that teach how to spot range-bound markets on their earliest stages, so that we can actually have a choice: to trade or to avoid it.

Range-bound Forex trading (General guidelines)

#1: We’ll be discussing methods and ideas for detecting and trading during range-bound markets. These methods are not going to shield you completely from ever changing market weather, but will help you to anticipate and make “weather forecasts” with additional accuracy.

#2: We'll use the main rule: if the market is not trending, always treat it as a ranging market.

When using indicator signals, if an indicator no longer shows signs of a healthy trend, immediately treat it as a beginning of a range-bound market until further improvements.

#3: There are few systems that can trade really well during both: ranging and trending markets, more often it is either one or another. If your trading system keeps losing during ranging markets, you have 2 options: a. stop trading during range-bound markets; b. make an additional system to use during this period.

Range-bound trading methods: