Four Sure Ways of Trading Forex Sideways

Hello and welcome to another edition of the bulls vs the bears. Today we are going to learn four sure ways of trading forex sideways. Now I can hear someone pulling his hair out saying” This guy is giving us mental whiplash today.” Don’t sweat this one. This is my own short hand way of showing you four tips for trading sideway markets. Let’s face it guys, you are not always going to enjoy sustained trends on the forex marjet- be it uptrend or downtrend. There comes a time when the markets are moving sideways. In other words, they are neither trending upwards nor downwards. This is where rookie traders fall victim to these skittish patterns. They end up up losing all their profits to these whiplash setups and then turn around and curse the market for their losses.

However, there is an interesting twist to this tale. Not all sideways markets are as crazy as you think. Some can be traded while others you just leave them alone if you value your sanity. Hopefully by the end of today’s lesson you would have acquired valuable knowledge as to how to make critical decisions when the market switches from a strong trending pattern to to a swerving whiplash situation. So Onward

First Tip

Is The Market Worh Trading Or Not?

The first question you need to ask yourself is “Is the market worth trading or not? If the market is not swinging between defined support and resistance areas, with good distance between both levels, don don’t even think about putting in a trade. Your account will become barbecued chicken.

I can hear someone asking”Well how do I know whether a market is worth trading or not?” Well you can start by zooming in on the daily chart frame. Now the question you need to ask yourself when looking at the daily chart frame is ” IS the market trending up or down?” If it’s not doing either, the market is moving sideways. Let me show show what sideway markets that are range-bound look like

Ladies and gentlemen this is what a range-bound looks like. See the distance between the support and the resistance levels of the range. Even more important these levels are well defined. This gives you the trader something to work with when looking for solid price signals and great risk/reward potential. You do all this hoping that price will move to the other end of the range, or at least inch closer to it.

If The Waters Are Choppy Dont Trade

It’s simple advice . Isn’t it? If the waters on the forex market are choppy don;t bother trading. Because if you take a dip in those waters the sharks will eat you up. Somebody is scratching his head wondering”What;s a choppy market?” Well a choppy market is one that consolidates so tightly. In fact it consolidates so tightly it’s as if a noose is hanging around the neck of the major traders. When you see a market like that it’s not worth risking your market in because the distance between reversals is not big enough to allow for a risk/reward ratio.

The next question I hear somebody asking is “How Do I know if the market is choppy?” Like I indicated earlier zoom in the daily chart frame. With lots of practice and experience, you should be able to tell whether the market is range-bound or shark -infested(choppy). Let’s take a good look at a good example of of a shark-infested choppy market

See how choppy and tight the price action is in the area with the sloping blue line. Any time you see setup like this, it can only mean one thing. The sharks are around looking for prey to devour. Put in a trade and you could become shark bait.

If you ask me you’d be better off staying away from shark infested markets. Because markets normally consolidate after long sustained trends. The big players are basically saying” We are tired. We need a break.” So when you put in a trade during consolidation, you risk blowing a crater in your trading account. The most painful part is you are giving away hard earned profits that you made from previous trades Let me show you exactly what I’m talking about using the GBP USD pair

See the the choppy price action all over the charts All over the charts you see a period of strong trends followed by choppy price action so tight you could catch a hernia. Even more important there distance between the key levels is very small. So if you dare put in a trade entry in this setup you are toast.

Trading in this scenario is like gambling in Las Vegas. Because the market crawls like a tortoise in this setup you’ll end up chewing in your finger nails and wondering to yourself “Is this going to be a move or a breakout?” Next thing you know the sharks eat you up and the market sucks you out of your position. S word to the wise is more than enough.

I guess the question burning everybody’s mind is:

What Do I Do When I See A Sideways Market Worth Trading?

Just like any other market look out for price signals at the support and key levels of the ranges. The best way to go about is by applying the false break strategy. When you wait for the false break to take shape out of the trading range you increase your chances of making a decent profit. Every trading range has at least one false break in its tank. And these false breaks trigger humonogus moves in the opposite direction back towards the other end of the range.

However false breaks can blow holes in your trading account, If you get your timing all wrong you could be in for a long day on the markets. But the most important thing to remember is that false breaks present great trading opportunities. You just need to be as sharp as a marksman

Dont bother following the herd when looking for false break opportunites. You may end up being sucked out of your trading position and lose a ton of money. When a breakout is legit, price closes outside the range for several days. It will then return to take another crack at the level that ot broke out of. And if the key level survives the retest, then it is a safe bet that the breakout was for real. But please don’t predict the possibility of breakouts as some traders are so fond of doing. This aint the lottery. Instead sit still and wait for the false break to take shape and then jump in like a lion hunting an antelope. Let’s take a look at an illustration below

Falsey 4

Here we have an obvious pin bar sell signal at the key support resistance level. Of course this signal triggered a huge slalom surge by the bears. And you know what means? Lots of moola along the trend The trend of course fades out with choppy price action taken over..

The same situation occurs along the line of support. Again a pin bat price signal triggers a huge surge upward surge for the hills by the bulls. And again it’s an opportunity to pick up profits along the way. Unlike the bears, the bulls don’t run out of breath that fast.

Last but not least

Don’t Blow Up Your Trading Account

It’s as simple as that. Isn’t it? If the opportunities to make a trade arent visible, stay put. Or else your account will go up in flamess. If the waters are choppy and not in range mode, keep your money and go for a walk. You would be better off getting some air rather than overtrading because you can resist the urge to stare at your screen all day.

If your favorite pair is in choppy waters check some other charts so if you can find a strong trend or a good trading range. Otherwise don’t force the trade as my friend and fellow trader Hunter Ripple once said. If there is no trade then there is no trade

That’s s wrap for “Four Sure Ways of Trading Forex Sideways.” Hopefully you ;ve learnt a thing or two about trading forex sideway markets. Forex markets don’t trend all the time. At some point they go ijnto consolidation. And when that happens dont bother trading. But when you do decide to trade a market that is skidding sideways, make sure that all the conditions are present for you to trade. Or else your your trading account will be upset with you.

Til next time take care.

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That’s s a wrap for “Trade Against The Trend…And Your Trading Account Becomes A Black Hole.” I hope you now understand that trading against the trend can be dangerous to your trading account, not to mention your health. When you trade on both sides of the trend you give back all your hard-earned profits like you are giving away confetti.

So What should be your New Year’s Resolution? Follow the dominant trend and avoid the countertrend like the plague. Your trading account will be the happier for that if you follow the direction of the trend.

Til next time take care.

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If you

Trade Against The Trend…And Your Trading Account Becomes A Black Hole

Hello and welcome to another edition of the bulls vs the bears. Today I have another poignant message for you. Trade against the trend and your trading account becomes a black hole. This is not a joke. This serious. You absolutely do not want to turn into a gambler and hope against hope that somehow you fan make a profit going anti-clockwise. Your trading account will absolutely feel like your skull if you try that.

Look why do you want to trade against the trend when the trend is showing you the money? You will be absolutely nuts trying to go against the grain. I know it’s human nature to explore the unknown sometimes. But this is not Russian Roullete. This is Forex Trading. And forex trading is a business. And the best way to profit as a trader is to go with the trend. If you are a rookie trader listening in on this post, read my lips”DO NOT GO AGAINST THE TREND!” Just take the path of least resistance. As the popular saying goes,”The trend is your friend.” So don’t act as if the trend is your enemy

So we are going to take a look at a few examples of how you can make money trading the trend and how you could bleed money trading against the trend.

First up is

An Obvious Bearish Trend using GBPUSD pair

Let’s take close look at the bearish trend around 25th August on the left side of the trend, It’s pretty obvious that the bearish trend is the winner here. It’s basically screaming trade me. Look at the bearish trade signal at the top of the trend. I mean how can you go against the trend?

Let me let you in on a little secret. When traders trade trends, they move in the same direction. I can hear hear somebody asking “Why is that so?” Well it’s the least course of resistance. You follow the path that is most travelled. The last thing you want to do is go against the grain and blow up your account.

When a market trends it makes a titanic move in the direction of the market. But then it pulls back to its most recent average price(Look up We are moving Averages Parts I and II). With that in mind, you trade from value since trends tend to resume at the point of value. You then look for price action opportunities that are backed by a confluence of trend and the average price behind them.

Now let’s take a look at an illustration of the dangers of trading against the trend using the same GBPUSD

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Take a close look at all the countertrades against both trends on the screen. There is absolutely no way you are going to make any money going against the grain Take a look at all those failed countertrend inside bar setups. It’s like trying to get in the way of a moving train when you try to trade against a stromg trend.

Don’t get so caught up in trying to trade against a strong trend that you put your account in harm’s way. You will definitely blow a huge crater in your trading account if you try to get in the way of a strong trend.

Now let’s take a close look at a clear trend using the USDCAD pair.

Here we see a nice strong uptrend glued to the channel on our right under the month of October. Not only do we see strong a trend direction, but we also see a value area that we can enter to a trade as far as price is concerned. This value area runs parallel with the strength of the uptrend.

See the numerous price action buying opportunies that the pin bars and inside bars present on this uptrend. It is pretty obvious the uptrend is the least course of resistance. Why would you want to against that? So looking for buy signals on this trend is the obvious choice, not trading bears on the downside.

Committing Suicide Trading Countertrend

However you’d be committing suicide if you so much as consider looking for a counter-trend signal on this chart. You see the the two long-tailed pin bars bearish pin bars? Even these two would have incurred for you a huge loss. The least you’d gain from these two is breakeven, at best. So when you see a strong trend, don’t fight it. Embrace it.

Next up is an

Obvious Downtrend Featuring the USDJPY pair

Take a look athe downtrend between 20th November and 4th December 2020. It’s pretty obvious isn’t it? You’d be crazy to go against that. So in this situation you’d be looking fo price action sell signals retraces back to the resistance level so you can trade parallel to the downtrend. Notice the pin bar signals forming following retraces within this falling market. This setup triggered this huge downward surge

Countertrend Pin Bars

Now take a look at the same chart and zoom in on the countertrend pin bars. You can see they have failed miserably. Anybody in his right mind will not even dare trading such lost causes. It makes no sense chasing bad money with good money. Try pursuing them and the only return you’d get is a huge hole in your trading account.

That’s s a wrap for “Trade Against The Trend…And Your Trading Account Becomes A Black Hole.” I hope you now understand that trading against the trend can be dangerous to your trading account, not to mention your health. When you trade on both sides of the trend you give back all your hard-earned profits like you are giving away confetti.

So What should be your New Year’s Resolution? Follow the dominant trend and avoid the countertrend like the plague. Your trading account will be the happier for that if you follow the direction of the trend.

Til next time take care.

Opening Of Live  Forex Trading Account

If you’re looking to open a live trading account  Sign Up With Exness.