Tips for Trading Sideway markets
A simple truth of trading is that markets are often moving sideways, neither trending up or down. It’s in these sideways market conditions that traders do the most damage to themselves. I’m sure you’ve experienced the infuriating feeling that comes with giving back all your profits on a recent winner because you continued to trade as the market stopped trending and started chopping sideways.
What a Sideways Market Tells You
A sideways market means prices are getting ready to continue forward in the same direction they had been in before. It’s unlikely that a sideways market will occur before a significant change in direction. Not all sideways market conditions are the same however; some are worth trading and some simply are not.
How to Identify a Sideways Market
To identify a sideways market, you must first find out the levels of support and resistance. Support is the price where buyers come back in. They don’t let the price fall below that level. Resistance is where buyers sell the investment. They don’t believe it will go much higher.
A sideways market trades within those two levels. That’s also called a range-bound market. It may occasionally rise above or below those levels, but it doesn’t follow through with an even higher high or lower low.
The Fact is 80% of the Time the Market is Sideways
What is the best way to trade with Sideways Market?
A sideways market is a difficult environment to make money for day traders. It is a welcome sign for those who are more likely to buy and hold.
The best way to make money in a sideways market is to be diversified. That way, you won’t lose too much or gain too much when the market breaks out.
Sometimes the Best Trade, Is No Trade at All
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