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Range-bound Trading

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Range-bound trading is a purely technical method of predicting a stock's short-term highs and lows. Range-bound trading stocks are stocks which are trading in a defined channel. Simply put, a range-bound trading analyst looks for stocks with a clear support and resistance level. The range-bound trading analyst then buys at the support and sells at the resistance. The simplest way for a range-bound trading analyst to create a channel is to connect a number of high chart points as well as a number of low chart points. The resulting channel is the range within which the range-bound trading analyst operates. A range-bound trading strategy requires fairly constant monitoring of the stock due to the fact that when a stock breaks out of a range it may make a dramatic and sudden price move.

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