A forex sideways strategy is a trade plan on how to trade the forex market when the price of security is moving sideways. This strategy tells a trader when to buy into such a market condition, what to trade, when to trade it, and when to exit the market. Obviously, there are different forex market conditions, and they all demand different strategies to be traded efficiently. However, it is always important to identify what the condition of the market is before one can determine what strategy to trade the market with.
THE FOREX MARKET IS SEEN FROM DIFFERENT POINTS OF VIEW
A market condition that John identified as a trending market may appear as a ranging market to Jane. Some traders think the forex market is always moving sideways; there might be little appreciations and depreciations entangled in the whole sideways movement, but they do not pay attention to that. Some other traders think the forex market is always trending up or down. To such traders, a quite market is simply not possible. They can go as far as applying some trading tools to filter off some “noise” so as to get a hold of the trend direction – and quite frankly, it works for them.
Despite how a trader sees the market, it is always important to have a general idea of whatever condition that may arise in the market as this will give the trader an upper hand in handling issues that are bound to arise in the forex market.
When the market is moving sideways, a lot of traders seem to do a lot of damage to their trades in the name of trading the forex market to make profits.
TIPS FOR TRADING SIDEWAYS MARKET
Here are some tips to help traders make some profits from a sideways market
1. IS THE MARKET RANGE BOUND:
Not all sideways markets are worth trading. The ones that can be said to be worth trading are the ones that are range bound; that is when the price of the security in question is oscillating between horizontal levels of support and resistance.
2. STAY AWAY FROM CHOPPY MARKET:
If the market is consolidating tightly, then it is choppy and not worth trading. When there is no much difference between the moves made by the security, then it can be risky to trade it.
3. WATCH FOR PRICE ACTION:
A good forex sideways strategy is always out for the price action of the security in question. This gives one a good idea of when to buy and sell at the support and resistance levels.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.