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  1. #1
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    Price action trading in sideways market

    Hi traders! Value trader is back.

    In this artice I will share with you some robust principles for trading inside a rotational market - I use them on a regular basis in my own trading. There’s nothing new about the fact that around 70% of entire trading activity occurs within a trading range (it concern currency market, of course - for commodities and stocks distribution is pretty different). Well, it doesn’t mean that the only way to obtain 80% of winning trades is to fade the price action. But it means that to trade successfully in rotational market, trader has to know the mechanics of rotational market.

    How one can identify trading range? Some traders do very simple thing - they connect extremes between each other and make conclusion that they know where ”border” of a trading range is.

    Attachment 12288

    But this way can be misleading - how do you know that any taken extreme is important and will not be renewed? According to my experience, it’s much easier to identify rotational center than border of the trading range.


    Rotational center:

    The best way to describe rotational center is to think of a simple moving average. Price gets back ro average, then moves away from it. Volatilty of swings to both directions tends to be similar:

    Attachment 12289

    But moving average may not be very accurate in real trading, because it performs well only in slow market with low volatility. In other circumstances it will lean to price, leaving trader confused about location of rotational center.

    In my trading, I use several clues, that help me know that I identify rotational center correctly. They are: “Emply candlesticks”, “Low volatility areas”, “Rail formations” and simple price probes. (I use M30 chart in my analysis, you should adapt principles shown below to your timeframe).


    Empty candlesticks:

    If I see candlestick with very elongated candlestick, I expect rotational center to occur somewhere within the body of that candlestick.

    Attachment 12290


    Rail formations:

    The same thing is with rail formations. If I see 2 candlesticks located close to each other, I expect rotational center to be located within this formation.

    Attachment 12292


    Low volatility areas:

    And the most important clue is area with extremely low volatility. On my preferred timeframe (M30) it is represented with sequence of several “doji” candlesticks (having very small bodies):

    Attachment 12291


    When I combine all clues together, I can get the idea of rotational center. And in many cases, it is not overlapping with moving average, that is, lagging indicator by its nature:





    P.S. I will keep this thread closed to comments, until description will be completed (to avoid questions, that are going to be covered later).

    to be continued...

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    Last edited by Value trader; 03-02-2015 at 07:02 PM.

  2. #21
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    Quote Originally Posted by Hukam View Post
    Yeah for sideways market scalping could be much better trading strategy than other's, personally I have a support and resistance based trading system which covering everything side ways, uptrend, downtrend. I have a combination of moving average and support and resistance. I come to know that trend is also important for me and I should combine both for making money in forex.
    That is the only thing that traders would have to resolve to during the sideways market, the market would not be definitive to be traded by any kind of traders, except the shorter term traders, they will be the ones that would have the skills to take the short profits in the market at that point in time, and the scalpers would prevail.

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  3. #22
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    Quote Originally Posted by cozard007 View Post
    That is the only thing that traders would have to resolve to during the sideways market, the market would not be definitive to be traded by any kind of traders, except the shorter term traders, they will be the ones that would have the skills to take the short profits in the market at that point in time, and the scalpers would prevail.
    Oh yeah most of trader's who follow the trend also struggle in sideways market trading and I am also one of them, this is a good technique to make money with sideways market this is a good suggestion for me too, so can I take the advantage of scalping trading strategy in sideways because right now I am not doing trading with sideways I am only waiting for the trend confirmation and sideways is a dangerous area for me in my current trading style.

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  4. #23
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    drawing of the different trend lines on referring limit with the extrem point of the price level as trader gains with the supports also on occupying use of subsequencial system to gives of chance on securing with the precise of option as preparing order creation with the market.

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  5. #24
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    When the market starts ranging then we should know that the market has come to exhausting stage, therefore there likely will be a reversal. I trade the candle stick pattern therefore I know what I have experienced and in such a moving market we just have to pay close attention to the support and resistance lines.

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    Quote Originally Posted by splash View Post
    When the market starts ranging then we should know that the market has come to exhausting stage, therefore there likely will be a reversal. I trade the candle stick pattern therefore I know what I have experienced and in such a moving market we just have to pay close attention to the support and resistance lines.
    it is not good to trade the ranging market, the market which is ranging on the lower time frame sis not a good way to trade, when it is on the higher side,traders can use the lower time frames to trade them if they want tovmake fast money, and experience has to be challenged.

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    Quote Originally Posted by silverlady View Post
    it is not good to trade the ranging market, the market which is ranging on the lower time frame sis not a good way to trade, when it is on the higher side,traders can use the lower time frames to trade them if they want tovmake fast money, and experience has to be challenged.
    Well, I don't trade unless I have a reason to and in that case in a ranging market, usually the way I trade, I do trade with the longer time frame like daily chart, the way I do trade I do wait for a breakout and experience has taught me that such breaks are more valid and relible.

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    Quote Originally Posted by splash View Post
    Well, I don't trade unless I have a reason to and in that case in a ranging market, usually the way I trade, I do trade with the longer time frame like daily chart, the way I do trade I do wait for a breakout and experience has taught me that such breaks are more valid and relible.
    [lang=id]it is good, do not enter the market when we have not gotten the right validation from the market, then we can reduce the risk from loses, and also we need to make sure with market situations before set the order, wait for breakout , you need to do trading carefully, and do not enter the market so rush when the indicators show it, but see the market, but you have prepared yourself[/lang]

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  9. #28
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    Quote Originally Posted by samprazaan View Post
    [lang=id]it is good, do not enter the market when we have not gotten the right validation from the market, then we can reduce the risk from loses, and also we need to make sure with market situations before set the order, wait for breakout , you need to do trading carefully, and do not enter the market so rush when the indicators show it, but see the market, but you have prepared yourself[/lang]
    That is the reason why I trade so many different trading pairs so I don't force my self on one pair thus taking my trade when there is nothing to trade, therefore I have more pairs which I check and takes trade on when there is a valid trade to take, I think that is how to know a good trader who really can make money from the market.

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  10. #29
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    Price action is one of the most traded technique in the modern world. It is also known as the naked trading of the forex market and also you can make good money with price action trading. Making money with it in the ranging market is a good idea i think.

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  11. #30
    Rookie layigold's Avatar
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    To be honest with you , I so much respect your opinion but the truth is that I would rather stay off the market when it is doing sideway because a wise trader would know that there is a time to fire and there is a time to take cover. When market is ranging sideway , I hardly trade because money is not easy to come buy. Trading is not gambling and when there is nothing to trade it is better to find some other things doing.

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