Trade in market lateral movement to many people is represented dangerous enough and ungrateful business. Attempts to apply break strategy work badly, and quite often develops such plot: after filling of stop warrants the price some time moves in the necessary direction, and turn round then, bringing the investor loss as a result. Not many people can buy from the bottom border of a trading range and sell in its top area – psychological pressure is too great because generally it is necessary to trade against a current trend. But there is one strategy, which works extremely effective on safety stocks, futures or the currencies, which designated the trading corridor and have begun movement in it.
The technique is constructed on the simple fact, saying that in a trading range at any increase above the border, dividing it in half, the market becomes stronger and is inclined to growth. Simultaneously with it, any fall below the specified line leads to easing of the market getting the bear properties. Thus, there is a possibility to use this border zone between the bull and bear market for short and intermediate term trade.
Trade from the middle of the range.
There are some rules for border zone use:
– To buy, if the market rises above the middle (50 % corrections) of the last complete market movement.
– To sell, if the market falls below the middle (50 % corrections) of the last complete market movement.
This technique is poorly applicable for trade with time frameworks over several days. More likely, it approaches for intraday trade and for cases of deduction of a position no more than 2-3 days. But the analysis in any variant should be made on day and even week schedules.
It is usually not difficult to reveal 50 % border of one, and it is even better – two consistently appeared last complete market movements, but there is a question: “What is it possible to use for acknowledgement reception?” Unfortunately, the simple answer on it does not exist – usually near to this border zone a little that specifies in unambiguity of the future events, and the market as a whole looks ready to move to any side. Therefore, to help to understand, how it is necessary to operate, viewing of behavior of the market can only during passage of the border dividing the bull and bear moods, including change of its character during this critical moment. Fortunately, online trade possibilities allow doing all of it, without resorting to a conclusion of the prices to the schedule. The entrance in trade by the given technique has a logical point of an exit, which prompts the revealed trading range, where the position needs to be closed. Other variants assume an exit near to any of levels of Fibonacci – depending on kinds on profit and possible losses.
Hope you will find the proper method of trade for you and will trade profitably.
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