Sunday, March 27, 2016

Make the Sideways Markets move Up or Down for you

Traders that have been involved with the online trading industry long enough have probably figured out that the market doesn’t only move in the two common directions (up and down) but the trickiest and slyest movement is the third, sideways. Even though it’s not at all an unusual motion for the market, it’s been noted that during the sideways window countless of traders self-destruct. Not knowing how to handle this specific shift, traders have watched their wins go up in smoke because the market stopped trending upwards or downwards and began chopping sideways.

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The trick to handling the sideways chopping is knowing how to identify which sideways markets are actually worth trading and which ones aren’t. A successful trader needs to be able to take advantage of whatever the market throws at him or her and not just evaluate the easily tradable conditions and make a killing from them but to also have the power to easily manipulate the less welcome sideways motions.

The secret behind knowing which sideways conditions can lead to profits is kept inside the charts. The trending lines of the market are what will help you decipher on whether that specific sideways curving will lead you to a bountiful outcome or a dramatic capital loss. Zoom out and get a bigger outlook on the markets daily activity, if the breaks in the decisive lines occur at a wider distance from each other that’s a market worth trading. The longer breaks allow the window for the trader to enter with good risk of expectation and good reward potential.

On the other hand if the breaks in the trending lines occur very close to each, it is a sign of an unworthy and risky market that the trader should just forget. The short distance makes it almost impossible, for even the most experienced traders, to forecast what will come next that ends up being a fools bet. Trading in such a risky market does not count as worthwhile trading but is regarded as gambling and mostly ends up with the ‘gamblers’ losing more than half of the capital they initially intended on trading, as a first loss will trigger a panicking series of clumsy trading decisions.

In the end the trader or investor always has the option to just say no. If the market is trending sideways in a way that is too hard to comprehend and follow, it’s always better to take a step back rather than attempt to understand something he clearly doesn’t. As mentioned before a choppy trending line is not a good sign at the same way neither is a choppy account that’s being halved repeatedly when a trader thinks that they can go against the market’s ‘denial’ to corporate and work to his or her favour. Instead the trader should take a deep breath and try a different market, or just return the next day with a clean new slate to work with.


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