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TRADE PARAMETERS FOR DIFFERENT MARKET CONDITIONS

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STEP ONE—PROFILE TRADING ENVIRONMENT _____________________________________________________________ There are many different ways that traders can determine whether a currency pair is range trading or trending. Of course, many people do it visually, but having set rules will help to keep traders out of trends that may be fading or to prevent traders from getting into a range trade in the midst of a possible breakout. Range Look for: ADX (Average Directional Index) Less Than 20 The average directional index is one of the primary technical indicators used to determine the strength of a trend. When ADX is less than 20, this suggests that the trend is weak, which is generally characteristic of a range-bound market. TABLE  Trend/Range Trading Rules An ADX less than 20 and trending downward provides a further confirmation that the trend not only is weak, but will probably stay in a range trading environment for a while longer.  Decreasing Implied Volat