Forex Trading Tips When Market Sideways (Part 2)
In the article in the first section we have discussed the "anatomy" of sideways and choppy markets; how the shape, what distinguishes these two conditions and what conditions can still be used to open a position in forex trading. As a refresher, let me remind you that in the previous article it is explained that we can still trade if the market is still in sideways condition, not choppy.
This article is a continuation of the previous article entitled Forex Trading Tips When Market Sideways first part. You are ready? Let's finish this sideways market trading trick.
What can be done?
When you can recognize the condition of sideways - where you can see the clear distance between each wave and there is a wide enough distance between support and resistance - the next step is to try to confirm the buy and sell signal between the support and resistance.
One technique you can choose is bounce trading, or commonly called range-bound trading. The basic concept is that you wait until the price reaches the support or resistance area, then try to confirm the buy signal (if the price is near the support area) or sell signal (if the price is near the resistance area).
But do not get me wrong, this range-bound technique is sometimes colored by a break of support or resistance, but the breakout should not be a "valid breakout". Even if there are several breakouts, then what happens should be "false breakout". In sideways conditions usually occur at least one false break and often followed by a significant movement in the opposite direction. In other words, false break utilization often magnifies the potential gain in range-bound trading.
To learn about range-bound trading (or bounce trading) techniques, you can read one section of the EduSpot article entitled Strategy Using Trendline.
The illustration of the above explanation is something like the following:
trading forex, forex trading, forex trading tips
Traders usually also use signals from oscillators such as stochastic or CCI to help signal buy or sell when prices are in the support or resistance area. But you need to know that the use of such oscillators is not the only method, as quite a few traders do "blind entry", ie enter a position when the price has touched support (buy) or resistance (sell) without using other technical indicators.
trading forex, forex trading, forex trading tips
Do not Trading When Choppy Market
If the market is moving choppy and you can not see a clear trading range, then the best option is usually not trading. All you need to do is sit back and watch the market and try to look for more opportunities if you can already see a clear range formed by price movements.
If you see a pair moving choppy, then the best option is to avoid the pair and try to find opportunities in other pairs, because it could be many opportunities created in other pairs. Do not be fanatical on one currency pair only, because it is tantamount to wasting market potential that gives access to many pairs.
May be useful.
This article is a continuation of the previous article entitled Forex Trading Tips When Market Sideways first part. You are ready? Let's finish this sideways market trading trick.
What can be done?
When you can recognize the condition of sideways - where you can see the clear distance between each wave and there is a wide enough distance between support and resistance - the next step is to try to confirm the buy and sell signal between the support and resistance.
One technique you can choose is bounce trading, or commonly called range-bound trading. The basic concept is that you wait until the price reaches the support or resistance area, then try to confirm the buy signal (if the price is near the support area) or sell signal (if the price is near the resistance area).
But do not get me wrong, this range-bound technique is sometimes colored by a break of support or resistance, but the breakout should not be a "valid breakout". Even if there are several breakouts, then what happens should be "false breakout". In sideways conditions usually occur at least one false break and often followed by a significant movement in the opposite direction. In other words, false break utilization often magnifies the potential gain in range-bound trading.
To learn about range-bound trading (or bounce trading) techniques, you can read one section of the EduSpot article entitled Strategy Using Trendline.
The illustration of the above explanation is something like the following:
trading forex, forex trading, forex trading tips
Traders usually also use signals from oscillators such as stochastic or CCI to help signal buy or sell when prices are in the support or resistance area. But you need to know that the use of such oscillators is not the only method, as quite a few traders do "blind entry", ie enter a position when the price has touched support (buy) or resistance (sell) without using other technical indicators.
trading forex, forex trading, forex trading tips
Do not Trading When Choppy Market
If the market is moving choppy and you can not see a clear trading range, then the best option is usually not trading. All you need to do is sit back and watch the market and try to look for more opportunities if you can already see a clear range formed by price movements.
If you see a pair moving choppy, then the best option is to avoid the pair and try to find opportunities in other pairs, because it could be many opportunities created in other pairs. Do not be fanatical on one currency pair only, because it is tantamount to wasting market potential that gives access to many pairs.
May be useful.
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