Range Trading

This requires that one identifies a range in which the security is moving and try to sell at the top of the range and buy at the bottom. The height of the range is what one tries to capture in trading (minus slippages etc. of course).

In terms of time, markets spend more time in ranges than in moving in trends. So the range traders are a busy lot as the market spends more time in their terrain.

Range trading is where all the trend following indicators take a toss. Their signals come too late and the whip saws of the range make usage of such indicators a nightmare.

This is where the overbought/oversold indicators can come in useful. Trade is taken when the indicators reach extremes.

The market is fickle and the ranges get broken some day. Ability to distinguish when the break is a false break and when it is a new trend is important to play this strategy.