Up Trend Signals Vs Range Bound Signals

Up Trend Signals Vs Range Bound Signals
Up Trend Signals Vs Range Bound Signals
Chart courtesy of Stockcharts.com

There is a big difference between trading up trending markets versus range bound markets. Different signals are profitable in different markets.

In up trending markets you can buy high and sell higher profitably, in range bound markets you are rewarded for buying weakness near support and selling near resistance.

In up trends a price gap up will begin a new trend of higher highs and higher lows, in range bound markets gaps usually fade and fill back to the previous days range.

In up trends holding positions pays as the trend up to higher highs continues after each pullback, in range bound markets  you are not rewarded for holding the risk of positions and are usually down for the year most the time.

In up trends cash flowing into the stock market pushes it higher as people accumulate long term positions, in range bound markets the existing positions are just traded back and forth with no advance.

Know your market to make the best use of signals.

Up trends: Buy breakouts, trail winning trades with short term moving averages, and let your winners run.

Range bound markets: Buy weakness, sell strength, fade gaps in price, and take profits while they are available.