How To Make Money In Sideways Market

How To Make Money In Sideways Market



How to​ Make Money in​ Sideways Market?
To be successful in​ forex trading,​ following the​ trend perhaps would be among the​ most popular skills that a​ trader must master .​
However this article won’t discuss about trending,​ but discuss about its opposite .​
History shows that most markets tend to​ move in​ a​ non-trending,​ or​ sideways fashion more of​ the​ time than they are in​ a​ trending mode .​
So how to​ trade in​ non-trending markets .​
The most popular answer would be swing trading.
The key point for swing trading is​ finding a​ market that is​ trapped in​ a​ sideways trading range (also called a​ congestion area),​ or​ in​ an​ up-trending or​ down-trending channel on​ the​ chart (remember,​ channel!) .​
When observing from the​ chart,​ the​ trader must be able to​ distinguish some clear support and resistance levels that are boundaries of​ the​ congestion area or​ channel .​
When a​ market price comes close to​ the​ support or​ resistance area boundary,​ the​ trader will establish a​ position: long if​ prices are moving lower and close to​ the​ support boundary,​ and short if​ prices are moving higher and toward the​ resistance boundary .​
It sounds simple,​ but remember,​ trading contains a​ lot of​ surprises .​
The price might break out the​ support or​ resistance boundary anytime,​ therefore skills to​ response quick,​ or​ good money management strategies are always critical characteristics of​ a​ seasoned trader.
Swing trading techniques can be used in​ any chart time frame -- daily,​ weekly,​ monthly and intra-day charts .​
Nevertheless,​ the​ most popular timeframe for swing trading is​ the​ daily bar chart.
Note that the​ strength of​ the​ support and resistance at​ the​ boundaries is​ usually determined by the​ number of​ times the​ market has pivoted at​ the​ boundaries .​
The rule is​ that the​ more times a​ market has reached a​ support or​ resistance boundary,​ and then reversed course,​ the​ more powerful is​ that boundary .​
It can also be said that the​ longer continues a​ channel,​ the​ more reliable is​ that channel .​
Thus,​ a​ trader wants to​ find a​ well-established channel or​ trading range for which to​ attempt to​ swing trade.
An exception to​ this is​ a​ market that has been in​ a​ trading range,​ but is​ bound by one or​ two powerful spike moves,​ which also indicate a​ strong support or​ resistance boundary .​
That means some congestion areas that may offer a​ good swing-trade opportunity do not require several pivot points .​
In fact,​ those one or​ two spike levels would be determined to​ be a​ potentially good pivot area for a​ market.
The swing trader should still use tight protective stops .​
As I​ mentioned,​ a​ breakout can occur anytime,​ might due to​ bad political news etc…Good money management strategies will keep traders out of​ problems .​
a​ good area to​ place a​ protective stop is​ just outside of​ a​ support or​ resistance boundary that makes up the​ trading channel or​ congestion area .​
For instance,​ if​ a​ market in​ a​ trading channel is​ nearing the​ upper boundary of​ that channel,​ the​ swing trader would establish a​ short position and would want to​ place his protective buy stop just above the​ resistance level that serves as​ the​ upper boundary of​ the​ trading channel.
In contrast,​ if​ a​ market is​ nearing the​ lower boundary,​ the​ swing trader would establish a​ long position and place his protective sell stop just above the​ support level.
I would explain how to​ trade in​ the​ trending market in​ the​ next article .​
Trade in​ trending market would be different,​ it​ is​ about identify the​ signals and ride the​ trends.




You Might Also Like:




No comments:

Powered by Blogger.