Basics Strategies

Making the Most of Range-Bound Markets


When markets don’t seem to trend, it can be frustrating for traders who attempt to make big gains from long-running moves. In fact, such times represent the worst kind of risk for trend-oriented traders.

That’s why it is useful to employ a strategy known as mean-reversion trading.

Mean-reversion trading can be classified as trading against the trend. When there is a sideways trend, or the market doesn’t seem to be moving substantially higher or lower, it is safe to assume that when the market deviates far from the mean it becomes more likely to revert to that mean.

 

 

That enables this kind of trading to grab profits within a range of prices. When the market moves away from the mean by a value that you have selected, enter a trade with speculation that it will revert back to the mean.

A popular mean reverting indicator is the Bollinger Band. It tracks the market’s volatility using bands with a 20 simple moving average as default. Moving averages can be used as support and resistance markers allowing you to see more clearly the reversions to the mean.

Mean reversion trading works because it can be assumed that every high or low trade is in a temporary price extreme. It allows you to take advantage of the rapid price changes in a currency pair that are commonly followed by a reversion to the mean.

 

 

This type of trading usually consists of taking smaller profits frequently with a larger risk and a smaller profit. The trick is to make enough gains and limit your large losses that you come out profitable in the end. Since you are making smaller, more frequent trades this dynamic greatly increases your win rate.

The benefits of mean-reversion trading:

  1. Profit opportunities are frequently available in any time frame
  2. Profitable trade opportunities can appear on any currency pair.
  3. Profitable trades happen very quickly
  4. Trades can win more than 70% of the time

The risks of mean-reversion trading:

  1. Even though less frequent, the average loss size can be larger than the average win
  2. Occasional losing streaks are possible and can prove costly

If you simply made a trade every time the market broke out of the set bands, your likelihood of a loss would increase because the market often generates false breakout signals. A mean-reversion trader needs to find a system that helps them be consistently profitable and limits loss size.

One of the benefits of Wiseinvest.ai is that the machine-learning algorithm carefully selects trades calculated to win more often and limit its losses when it makes a loss.

It searches out mean-reverting trades and includes them as part of its trade signals. That is one of the ways the system has maintained such an excellent track record over time.

The best way to trade forex

There are two ways to invest with our AI in forex:

1. Automated with AI-Trading. Check out the 3 steps to trade automated with our AI.

automated trading with ai bot

Don’t you have a broker account yet? Our AI is integrated to trade automated with the broker Oanda. Click here to open an account.

With Automated AI trading you do not need MT4 / MT5 and other trading platforms to invest in forex. All forex trades are automatically placed into your broker account and you can monitor the AI trading performance directly on our dashboard.

2. Manually with AI-Signals.

Wiseinvest also provides AI forex signals that perfectly fit into MT4, MT5 and any trading platform. To trade with our AI forex signals, you must simply copy the data you receive from each real-time signal into any forex brokerage account of your choice.

There are five unique variables for each AI signal, and each must be copied exactly, in order to match the performance of the signal as close as possible.

Each AI signal alert consists of the following five data points:

  • Symbol (forex pair)
  • Direction (long or short)
  • Position size (number of units or lots)
  • Take profit (price level to exit with maximum gain)
  • Stop loss (price level to exit with maximum loss)

You can trade forex with our free forex signals clicking here, or with our Premium subscription that provides you unlimited AI signals and automated AI trading in partner brokers. Whether you are a beginner or a Professional forex trader, our AI trading system can help you save time and improve your trading performance. Get started with free AI.

When investing through Wiseinvest automated AI trading or AI forex signals, you do not need to calculate or change the leverage in your forex broker account. Learn more about leverage in forex trading clicking here.

Disclaimer: Forex and Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money due to leverage. Forex trading is not suitable for everyone. You should consider whether you understand how forex and CFDs work and whether you can afford to take the high risk of losing your money.

The forex brokerages displayed shall disclaim the overall performance of traders in their platforms. Oanda warns that 76.8% of retail forex traders lose money trading CFDs. XTB warns that 80% of retail forex traders lose money trading CFDs. The forex broker Fxcm warns that 69.66% of retail forex traders lose money trading CFDs.

The performances aforementioned are not related to Wiseinvest AI forex trading and AI forex signals system. You can check the performance of our AI forex system on our dashboard.