Kardec Trader explains why most traders lose money in range-bound markets. Fake breakouts and stop runs pull price back into consolidation zones. Bollinger Bands flatten during choppy trading, then expand when a real trend starts.
This is when the majority of the people are going to get chopped up. And so just imagine if you drew like a line right across and just these things. And I did those kind of on purpose. Fake breakout, bake back to the range. Fake breakout break back into the range. Fake breakout down here. If I did the same thing back into the range. So if all of a sudden you're trying to chase longer primary trend here, you're just getting hosed. So you have to recognize that anytime you get outside of these ranges, when we're in a two way tape and consolidation, the likelihood of us coming back into that range is high. And so I almost look for like stop runs above recent highs or lows and just come back in the range. Now ultimately, what are we looking at next? What happens right here? What happens is the Bollinger bands go from being flat, start pointing outward. What does that mean? Expansion. Anytime you have range expansion, you then depending on the direction of the market, right? If it's expanding, Bollinger bands are going up and we're hugging the top Bollinger band. Or we could be going down. Like we have been a lot of what this year is, we're now expanding the range. The potential to expand the range in that direction.
