All lessons
Build a range-trading hypothesis
A range has an inside and an outside. Plan for the day price leaves, not only the bounces you hope to catch.
Test a range setup while allowing the range to break.
A range is an interval in which price has repeatedly traded without sustained progress. Mark its boundaries using only information already available. Repeated reactions suggest areas to investigate; they do not create permanent walls.
Write how many prior reactions define the range, how wide the boundary zones are and what entry trigger is required. Decide whether the centre or opposite boundary is the target. Include spread when judging available reward.
Plan the transition: a range can develop into a trend. Specify invalidation, maximum holding time and when you will stop attempting repeated entries. Do not widen stops simply because price has broken your preferred picture.
Let’s use numbers · hypothetical example
Hypothetical boundaries are 1.0700 and 1.0740. Entry 1.0705, stop 1.0695 and centre target 1.0720 imply 10 pips risk and 15 reward before costs. A close below the range can invalidate the setup rather than offer a cheaper buy.
Keep in mind
A narrow range may leave too little reward after spread. Repeated small wins can be erased by one uncontrolled loss.
Your turn
Draw a range before revealing later candles. Record one successful reaction and one break using the same rules.
A quick check before we move on
What should happen when your range invalidation occurs?
- Follow the predefined exit or no-entry rule
- Keep widening the stop
- Assume the boundary must hold
Check answer
Follow the predefined exit or no-entry rule A range is a temporary hypothesis. Its failure must have a planned response.
Sources and further reading
Content reviewed: 29 October 2026
Educational material with hypothetical examples. Trading can cause substantial losses. A course, pattern, stop order or past result cannot guarantee a profit or limit every loss. Practise in simulation and check current rules and product terms in your jurisdiction.
