1/07/2013

How to use range contraction



As I said on Friday for beginner trader a structural understanding of market is key. One of the widely used methods by swing traders for hundred year or more is based on this understanding of range contraction and range expansion.


Periods of range contraction and volatility compression tend to be followed by periods of range expansion and volatility expansion.


Periods of range contraction and volatility compression tend to be followed by periods of range expansion and volatility expansion.


This is an empirical observation on stocks moves for hundreds of years. Now if you understand this you know what to look for in a stock. Find stocks that are in range contraction phase

Most swing trading methods are based on understanding of this phenomenon. 
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