UK100 Range Trading

Range trading is buying at support (lower boundary) and selling at resistance (upper boundary) when price oscillates between defined levels. It's mean reversion - expecting price to return toward the middle after reaching extremes.

Look for 2+ price touches at both support and resistance. Draw horizontal lines connecting swing lows (support) and swing highs (resistance). Range should be 40-150 points wide for UK100. Boundaries should be clear and recently respected.

Stop goes beyond the range boundary with 10-20 point buffer. If buying at support (7,450), stop at 7,430-7,440. If boundary breaks, your range thesis is wrong - stop protects capital.

Target 50-80% of range width (70% is standard). For 100-point range, target 50-80 points profit. Don't try to capture the entire range - leave margin for imperfect entries/exits.

Ranges form when buyers and sellers reach equilibrium. Could be: Consolidation after big move, accumulation (smart money buying before markup), distribution (smart money selling before markdown), or waiting for news/catalyst.

Ascending (higher lows, flat resistance): Favor longs at rising support - bullish bias. Descending (lower highs, flat support): Favor shorts at falling resistance - bearish bias. These ranges break in direction of the bias.

Tightening range (higher lows or lower highs), weaker bounces from boundaries, increased volume at boundary, price spending more time at boundary (consolidating instead of bouncing), and extended duration (many touches = aging range).

Check Daily/H4 for major context and levels. Identify trading range on H1/M30. Execute entries on M15. When LTF boundaries align with HTF levels (confluence), trade with more confidence and possibly larger size.

When price breaks boundary then quickly reverses back inside (within 1-3 bars). Enter trade toward opposite boundary, stop beyond false break extreme. High probability because trapped breakout traders fuel the reversal.

Score 0-10: Boundary clarity (0-3), Touch count (0-3), Rejection quality (0-2), Width (0-2). Score 8-10 = Excellent, 6-7 = Good, 4-5 = Marginal, <4 = Avoid. Trade higher-quality ranges.

Find swing highs/lows programmatically (left/right bar comparison). Cluster prices within tolerance to find boundaries. Validate: Width 40-150, touches 2+ each side. Score quality. Generate signals when price at boundary with rejection pattern.

Volume profile shows VAL (Value Area Low) and VAH (Value Area High) - natural range boundaries. When VAL/VAH align with price-based S/R, confluence increases probability. Trade at these aligned levels with more confidence.

Fixed fractional (1-2% risk per trade). Kelly-adjusted for aggressive sizing (half-Kelly recommended). Volatility-adjusted (reduce size in high vol). Per-range limit 3%, per-direction 5%, total 10%.

Walk-forward testing: Optimize on 6 months (in-sample), test on 2 months (out-of-sample), roll forward. Test entry zone %, target %, stop distance. Need 50+ trades for statistical significance. Avoid over-optimization.

Win rate 60-75%, Profit factor >1.5, Expectancy positive, Sharpe ratio >1.0. Track by range quality, entry type, session. Breakout losses should be <25% of total losses. If metrics deteriorate, reduce size and review.