Posted by: joetradingplace | March 20, 2014

Ranging Markets

This quarter hasn’t been very kind to trend traders, but how do we survive in a sideways market?. We trade cautiously, in the direction of the daily trend, for example, if price is going down on daily chart, and ranging on 4 hr, we sell at resistance, but if price keeps coming back to the resistance, we stop selling because price is more likely to break the resistance after a few visits. In a ranging market, we reduce our profit targets, targets should be within the range, but we also give room for the home run, thus the last target can be placed well outside the range. It is important to note that more often than not, the market will break out of a range in the same direction of the move prior to the range.

No single trader knows when the market will break out, so we just play our setups as usual. But if the market starts to go into a very tight range, we stop trading until price breaks out of the tight range. As trend traders we don’t try to determine when the market will reverse, we just following the main trend. We buy retracements in an uptrend and sell rallies in a down trend.

Even though the market has been in a range this quarter we have managed to be profitable and provided profitable signals to our members….we cant wait to see the market trending.

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