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; what shape, what distinguishes the two conditions and what conditions can still be used to open a position in forex trading . As a refresher, I remind you again that the previous article explained that we can still trade if the market is still in sideways , not choppy .
This article is a continuation of the previous article entitled Forex Trading Tips When Market Sideways the first part . You are ready? Let’s finish the business of this sideways market trading trick.
What can be done?
When you can recognize sideways conditions – where you can see a clear distance between each wave and there is a wide enough gap between support and resistance – the next step is to try to look for signal confirmation to buy and sell between the support and resistance.
One technique that you can choose is bounce trading, or usually also called range-bound trading . The basic concept is that you wait until the price reaches the support or resistance area, then try to look for buy signal confirmation (if the price is near the support area) or sell signal (if the price is near the resistance area).
But don’t get me wrong, this range-bound technique is sometimes also colored by the occurrence of a breakdown in support or resistance, but the breakout that occurs cannot be a “valid breakout” . Even if there are several breakouts , what happens must be a “false breakout” . In sideways conditions usually occur at least one false break and often also followed by a significant movement in the opposite direction. In other words, the use of false breaks often increases the profit potential in range-bound trading.
Traders usually also use signals from oscillators such as stochastic or CCI to help give buy or sell signals when prices are in the support or resistance area. But you need to know that using an oscillator like that is not the only method, because there are enough traders who do “blind entry” , that is, entering a position when the price has touched support (buy) or resistance (sell) without using other technical indicators.
Don’t Trade When the Choppy Market
If the market is choppy and you cannot see a clear trading range , the best option is usually not trading. All you need to do is sit and watch the market and just try to find another opportunity if you can already see a clear range formed by price movements.
If you see a choppy pair move, then the best choice is to avoid the pair and try to find opportunities in other pairs , because it could be that there are many opportunities created in other pairs . Don’t be fanatical about just one currency pair , because that is tantamount to squandering the market potential that gives access to many pairs.
May be useful.