When the Market is in Sideways Conditions, These are Forex Trading Strategic Tips that Can Be Done
When the forex market is sideways, many traders tend to avoid market conditions like this. This is because in conditions like this traders often experience losses or losses.
In such market conditions, some of the profits that you have collected are lost due to losses that occur during a sideways market. This kind of thing usually happens because the trading strategy that you apply in the sideways market is not suitable and only fits in the trending market conditions.
How to overcome the above problems?
What should be done when the market is in sideways condition?
Here is a further explanation for all of you.
1. Take Care of the Existing Market Conditions
Market conditions that are in a sideways state can be a decent condition for trading when you see prices start moving up and down within a certain range. In simple terms the price movements in the market begin to rise and fall on the 2 horizontal lines in the graph. 2 horizontal lines are commonly known as supportand resistance lines.
The thing you need to remember is that there must be a wave that occurs between the support and resistance lines and there is also enough distance for each wave. This condition is considered as a proper condition for trading.
2. Choppy, Circumstances that are not worth trading
Then there is a choppy condition which is a term used to describe a market situation that consolidates in a narrow price range. When this condition occurs, you will not be able to see the waves clearly.
Why are the conditions above not worth trading?
Because, when conditions like this occur, the distance between turning points that occur is not wide enough so it is very unlikely to apply the risk to reward ratioproperly.
When you trade in choppy market conditions, you tend to gamble there. Not to mention that when viewed from a psychological standpoint, this condition is very difficult to deal with and you are very easily trapped by predicting a breakout will occur even though the reality is not.
After properly identifying good conditions for trading in sideways market conditions. Following this we will continue the discussion of techniques that you can do when trading on sideways market conditions.
Trading Techniques When Sideways Market Conditions
When you know the sideways condition and see a clear distance between each wave and there is a wide enough gap between support and resistance . Then the next step is to start looking for signal confirmation buy and sell between support and resestance.
The technique you can use is to utilize bounce trading. The concept of this technique is that you only have to wait until the price reaches the support or resistance area and then look for buy signal confirmation or sell signal.
When applying the above techniques, you should not be mistaken, because this bounce trading technique often happens to break support and resistance. The thing that should not happen is do not let the breakout occur is a valid breakout.Even though several breakouts occur, it’s best to have a false breakout.
The thing you need to understand well is when there are sideways conditions there will usually be a false break and usually will be followed by a significant movement in the opposite direction. Thus utilizing the breakthrough will increase your potential for profit in a bounce trading range.
In addition to using the techniques above, traders also usually use signals from Oscillators such as Stochastic or CCI to give a buy or sell signal when the price is in the support and resistance area.
The thing you need to know is that using the Oscillator as above is not the only way to do it. There are enough traders who do blind entry that enters the position when the price has touched support or resistance without utilizing other indicators.
Never Trade in Choppy Market Conditions
When market conditions are choppy, then you will not be able to see a clear price range. When this happens, the thing you need to do is not trade and just wait.When this condition occurs, you can observe the market and try to find opportunities again when you can see that there is a clear price range formed.
Avoid the pair that is in the above conditions and you should look for opportunities in another pair. There could be more opportunities that will be created in other currency pairs. This means that you don’t just stare and use 1 currency when trading on the forex market, take advantage of other market potential that you can get.
Thus the explanation that we can convey above relates to the sideways market conditions. Hopefully the explanation that we have given can provide a lot of new knowledge that can be applied in the forex trading that you do.
If there are still explanations that are still poorly understood, please just ask us through the comments column below. We will be happy to answer every question that comes in.