On the other side of the trading methods' scale stand the range traders who, in complete opposite than the trend traders, don't care much about the actual price direction. Range traders count on the odds that prices will move through the same points time and again, and the traders' aim is to expand those wiggles for profit generation. The FOREX range trader's motto is that it does not matter which direction the currency takes, it will eventually reverse back to its point of beginning (on contrary to the trend trader's motto which is to sell when the price is at its peak and vice versa). In order to become a range trader you need a adapt to a completely different state of mind, as instead of searching for the best entry point, range traders prefer to be mistaken at the outset so that they can establish a worthy trading position (i.e. EUR/USD= 1.2500, a range trader will go short on this pair and again every 50 points higher and buy back every 25 points lower, assuming the pair will eventually go back to 1.2500. In case this pair will shift up and down back to 1.2500 as the trader first predicted, he should generate a substantial revenue).
Investors who use this FOREX technique are generally advised to have a big initial bankroll and a regular job which they keep on the side, as every wrong move could lead them to a huge loss. For those of them who use high leverage, a margin call would be triggered. If you are a newbie to the FOREX world and would like to become a range trader, it is best that you first start using mini-lots of 10,000 rather then the standard lots of 100,000 units. Setting your stop-loss at 200 pips rather than 20 pips will lower the risk factor, and this tactic leaves the range trader with plenty of room to wiggle with his trades.
To conclude, the FOREX market is well suited for both trading techniques - you simply need to choose the way that is the right way for you, and stick with it. Use the money- management system that goes along with it and you should have your chances to profit from the foreign currency exchange market highly increased.
Mia Milis is an independent trader and provides financial advice regarding foreign exchange to several institutions as well as private individuals. Being an Internet enthusiast, she has taken up to provide advice through her brilliant articles, and in recent years has also founded theforexblogger.com in order to provide a platform online traders worldwide could share experiences through. Visit Mia at
www.theforexblogger.com.
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