For measuring the direction and nature of price movements, traders often use trend line or ranges to detect significant changes in the market. Apart from price action traders, even long term oscillation traders prefer to vouch for range trading. When you draw a bar connecting similar price movement ranges, it is called a range bar. Range bars Forex closes either at the highest or lowest regions of range. So if the market is not experiencing much movement, range bars are straight lines.
Available for free downloading on MetaTrader platform, range bars provide better grip on price action than any other. It pinpoints the precise locations where traders can expect entry into/exit from market depending on several conditions. It helps get rid of the noise that hinders smoother signaling.
Five advantages of trading with Range bars Forex:
This currency market is extremely volatile, and therefore one should take care of irregular market movements arising from sudden economic booms/crashes or political events (like Brexit). Range bars give a better picture of market directions.
1. Tackling noise and making cleaner charts:
Range bars help traders get rid of volatile noises in the picture. Since you are dealing with larger time frames, smaller frames may provide false potentially viable points. Since the range bars are of equal sizes, chart looks tidier, and it becomes easier to take decisions.
2. A Wider view of price movements:
Range bars provide more information on accurate market trends. Since trends deal with smaller and precise fluctuations, it often carries irrelevant information with it. Additionally, you can also use indicator for trading alongside bars. Thus it helps to improve the potential risk: reward ratio.
3. Irrespective of the time factor:
Range bars Forex further help in eliminating effects of time frames in trading. Since it has similar triggers with time bars, it allows traders to wait till closing of bar and beginning of a new one. These further aids in putting stop losses and take profits efficiently.
4. Precise strategy making:
Range bars actually give a wider picture of the price movements. Wide range bar pattern Forex helps traders make an estimate of the number of pips that it will produce at a particular point. Irrespective of the time factor, one can place their orders and choose to buy/sell even before trade has started. Timing is very important and therefore you should when to place stops for a shift in highs and lows which make up the bars.
Apart from options to select time charts for better trading Metatrader now offers compatibility with range bars Forex. Apart from range bars you can also place stops and reduce market noises with its newer version. Utilize price action parameters to detect currency movements over a wide range.
Range bars are not indicators in their truest sense. They are just informative focus points which denote potential market movements and how you should react to it. Instead of simply following price movements you may choose to observe range bars for that perfect trading instrument. Know more on the intricacies of range bars Forex and get info on live price action scenario.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.