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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. #911
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    Quote Originally Posted by fahaddd View Post
    I agree with you opinion about the price action trading strategy it is very good and most effective way in trading we have to work according to the best techniques we can use , and with the use of indicator this will be the best trading strategy we can use and also it will give trader more opportunity always for earning better from market .
    If you are select the price action trading strategy then you are not need to work with any indicator because if you want to use indicators then do not use price action trading strategy. I think you are not know well about the price action strategy which is based on traders naked skills in which they are work without any indicator.

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  3. #912
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    If we are trading the side way market in forex, then we must come in conclusion that there is no known market direction and what a trader must work for in this business is to see they can sure get on with good trading. The best way to trade a ranging market is to look out for short term opportunities and get on to build the best kind of trade that we need to grow in this business.

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  4. #913
    Trader Lyon's Avatar
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    The trader that gets to earn money from the market is the one that understands their trading strategy and then knows the best time to take trade and when not to take trades. In accordance to the learning I have done. I have been able to know that trading with the use of the sideways moving market will not be beneficiary to the way I trade. It will probably make me take a wrong signals.

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  5. #914
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    Quote Originally Posted by Lyon View Post
    The trader that gets to earn money from the market is the one that understands their trading strategy and then knows the best time to take trade and when not to take trades. In accordance to the learning I have done. I have been able to know that trading with the use of the sideways moving market will not be beneficiary to the way I trade. It will probably make me take a wrong signals.
    using the support and resistance the trader can really trade good with the use of the side ways market movement. Most importantly is that we should do that on the use of the higher time frame, because little time frame is wrong trading time frame, well, not every one could wait for the trend to manifest before trading, that is one thing I am sure about.

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  6. #915
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    From my perception of making use of price action, the trader just need a valid knowledge about support and resistance trading, when that has been known and understood, it gets to be more easier for the trader to earn. I have been learning with the use of the support and resistance of lately and then my experience has been awesome, because I did see that it can give a big signal every now and then when to trade.

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  7. #916
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    Education is the most important thing about the forex market because most of the things that are flooring us as traders is as a result of not having the right knowledge about the forex market and one of them is the case of trading the price action on the sideways trading system which is always considered as a bad way of trading the forex market before now. This is due to inadequate knowledge of the market.

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  8. #917
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    If we are surely working to make a good trade in forex, we need proper understanding about the market and know what we should be doing at the very best point in time. Side way market gives possibilities of a no clear trend rather gives a ranging market that clocks around an area with a little push of bullish and bearish patterns. From experience I think the best way to trade such trade is trading for a short term and smart scalpers can take advantage of this market to make good profits.

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  9. #918
    Trader cutiekc's Avatar
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    All the market direction and movement does provides good movement and then opportunity for the trader, it then depends on the trader to be able to make good trading decisions to that regards and then make good analysis. I like the market trend and then also side ways movement, in recap, I trade all of them on bigger time frames.

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  10. #919
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    In a sideways market, trading price action can be done but the approach is going to be different entirely than when we are using same strategy for a trend, almost anybody can make profits from the trend but with the market going into some serious range, it is only a handful of Forex Traders that can have the minds of pulling the trigger here, the risks are higher and the rewards are smaller too.

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  11. #920
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    Price action is the best part of this business and traders who are use the price action trading strategy they are always earn profit. If traders are work hard then its possible for them to earn profit from this market and this price action trading strategy is the best way of trading that is help traders to know the long term market trend and traders success will become possible.

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