Forex Trading Tips When Sideways Market
Forex market movements do not always follow what we want. In fact we are advised to follow the movement of the market direction. Right? There are 3 direction of forex market movement we know that is Bullish (up), Bearish (down) and Sideways (horizontal).
Well when the market is in a horizontal movement or sideways or frequent disbut also ranging, there are some traders who try to buy at low prices and sell at high prices. While this may seem simple, in practice there are tricks to be understood.
Traders who use the trading range strategy should be able to detect price patterns on charts and technical indicators as a tool, to help forex traders optimize trading opportunities become more profitable.
Normally, the forex trader will recognize the various levels of support and resistance, to be a reference level of buy or sell entry. This makes trading when the market is ranging (sideways) occur between two parallel horizontal lines of support and resistance. In that area traders are looking to profit from price conditions that move ranging.
Often the price moves between two parallel lines (support and resistance) for days and sometimes within a week before a breakout occurs (out of range). Utilizing this condition, many traders take the SELL entry position in the resistance area and take the BUY entry position in the support area.
In addition, the stop loss level may be placed below the support or above the resistance to limit the risk that may occur and ensure that losses can be minimized when the price turns out to breakout.
The most common momentum is when the price moves a breakout with great strength and breaks through the resistance or support level. After that the price skew will move to the next target movement with the same setup with the vertical distance between the projected line from the price level before the breakout occurs.
For example, if a breakout occurs on the upside (resistance), the trader needs to add a step by measuring the breakout level to get the target profit level. Some traders will take advantage of these opportunities with: (and vice versa)
BUY on dip (correction) when price moves up (break of resistance)
Placing stop loss when the price moves sideways
Placing the take profit level
However, keep in mind that it takes certain skills to be able to analyze price movements technically. Therefore regular and consistent practice should be done.