Price action trading in sideways market

[Value trader]

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.

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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:

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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.

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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.

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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...

[galadiator]

Of course, when trader develop every type of strategy with good planning and understand to see and understand movement well then you should develop strong price action strategy for trading on market. Toward getting success on forex market hardworking and daily basic good learning about market movement are very important for trader.

There are so many good and most effective trade strategies we develop so easily we understand this market and make our ideas better first of all we have to understand the whole market then we are able to apply or management skill for trading with price action trade strategy it is very best in use for build strong trade plan .

[precious]

Sir, thank you very much for this very educative thread here about the trading of the price action system on the market sideways. In the time past we have always been told never to trade the consolidation or sideways market because it is very much risky, but i do not think that that school of thought is right because your explanation here on how to trade the price action on the sideways has really proved that.

[alizahid]

Sir, thank you very much for this very educative thread here about the trading of the price action system on the market sideways. In the time past we have always been told never to trade the consolidation or sideways market because it is very much risky, but i do not think that that school of thought is right because your explanation here on how to trade the price action on the sideways has really proved that.

From reading point of view it is best i agree but when a trader applies so there will be a big difference arises it is good if we found a good material but with application knowledge and practice we have good trade opportunity through we should make our trade plan more accurate and also it will help trader to get positive trade results .

[Makaveli]

There are so many good and most effective trade strategies we develop so easily we understand this market and make our ideas better first of all we have to understand the whole market then we are able to apply or management skill for trading with price action trade strategy it is very best in use for build strong trade plan .

There are good ones, but then again there are times when it will be wrong to actually get to trade on. Like the side ways market I consider to be one of the wrong timing to trade the market, only if you are fully experienced then that is when you can really get to trade the side ways market, but when you are not experienced enough, you should get to trade with the trend alone.

[ict2014]

Forex market price action very unimaginable. When a trader has a lot of tools with and a lot of experience in the demo or real trading just he can understand market price movement. I always dignify price action trading system. The reason is very clear that is only price action trading system is reliable because there every candle gives us information what will be a future trend of the market. We need to obtain the power to understand every candle language.

[biru]

Price action is good trading strategy that is help us to gain daily basis good profit and use price action trading strategy when its trend is side ways we will make good profit within very short time period. We must make plans for trading because without making strong and powerful trading plans traders can never make success on forex business.

[melan]

Price action is good trading strategy that is help us to gain daily basis good profit and use price action trading strategy when its trend is side ways we will make good profit within very short time period. We must make plans for trading because without making strong and powerful trading plans traders can never make success on forex business.

I give 10 out of 10 to this trade strategy because most of time i used this strategy and it is very helpful for trader to make our trade ideas valid through that way and we find the market trend and we are working in side way market for performing our trade ideas accurate to get success from market to achieve success .

[Striker$]

I am a price action trader as well and then I have learned about how to make use of the side ways market as well, it is quite a good means of trading, in as much as you have the proper support and resistance knowledge by which the market moves and work with, I am sure you should be able to figure out how to make analysis on the side ways market.