Range Break Indices


Range Break indices are synthetic instruments that simulate one of the most common market behaviors: price trading within a range (consolidation) followed by a breakout. They are designed to help traders practice breakout strategies without the unpredictability of real markets.

Available Range Break Indices

Range Break 100

• Price trades within a defined range
• Breaks out of the range on average every 100 ticks
• After a breakout, a new range forms
• More frequent breakouts, smaller ranges

Range Break 200

• Price trades within a defined range
• Breaks out of the range on average every 200 ticks
• After a breakout, a new range forms
• Less frequent breakouts, potentially larger moves

How Range Break Indices Work

The Range Phase:

1. Price establishes an upper boundary (resistance) and lower boundary (support)
2. Price oscillates between these boundaries
3. The range width varies but remains within defined parameters
4. During this phase, price movement is contained and predictable

The Breakout Phase:

1. Price breaks decisively above resistance or below support
2. The breakout direction is random (up or down)
3. After the breakout, price moves impulsively in the breakout direction
4. A new range eventually forms at the new price level

Trading Strategies

Strategy 1: Breakout Trading

The primary strategy:

1. Identify the range boundaries on the chart
2. Place pending orders above resistance (buy stop) and below support (sell stop)
3. When one triggers, cancel the other
4. Ride the breakout move until a new range forms
5. Set stop loss just inside the old range

Strategy 2: Range Trading

Trading within the range:

1. Buy at support, sell at resistance
2. Use tight stop losses just beyond the range
3. Take profit at the opposite boundary
4. Risk: A breakout will stop you out — accept this as a cost of the strategy

Strategy 3: Breakout Retest

Wait for confirmation:

1. Wait for price to break out of the range
2. Wait for price to pull back and retest the broken level
3. Enter in the direction of the breakout on the retest
4. Stop loss below the retest level

Comparing Range Break 100 vs 200

Risk Management

1. Range trading risk: Stop loss beyond the range boundary — expect to be stopped out on breakouts
2. Breakout trading risk: False breakouts can occur — always use stop losses
3. Position sizing: Risk 1-2% maximum per trade
4. Do not chase: If you miss a breakout, wait for the next range to form

Key Takeaways

• Range Break indices alternate between consolidation (range) and expansion (breakout)
• They are the ideal training ground for breakout strategies
• Range Break 100 has more frequent but potentially smaller breakouts
• Combine range trading during consolidation with breakout trading for maximum opportunity
• Always have a stop loss in place — breakouts can happen at any time