Filed under Forex Tips
There are 3 ways the currency market can move namely UP, DOWN and SIDEWAY. If the price is moving in a particular trend, it will be easy to trade as going with the trend is one of the most profitable ways to make money. However when the market moves into sideway movement, it can be a troubling problem for most traders.
Therefore I will be going through with you how you can make money from trading a market that is moving sideway.
1) Range Trading: This is one of the best ways you can trade a sideway moving market. All you have to do is to draw out major support and resistance level that the price is moving within and this will form something known as a trend wall or trend channel.
Once you know that the price is moving in a particular sideway movement, you can then enter a SELL trade when the price hits the resistance and enter a BUY trade when the price hits the support level. Of course, you should not be trading simply based on the levels alone and you should definitely include the use of oscillator to help you in your entry and exit.
Personally, I love to use the stochastic or RSI in this type of trade. You can enter a SELL trade as stated above when the stochastic or RSI is overbought and you can enter a BUY trade when the stochastic or RSI is oversold.
2) Scalp Trading: Forex scalping is a quick way to make a trade and you will usually exit your trade within a short time frame. In this type of trade, you have to make use of support and resistance levels like pivot point or Fibonacci to better optimise your entry and exit.
Similar to the range trading stated above, you will need to identify the range of movement of the price before you can execute this type of trade. Once you have established the range, you can then plot the various pivot points or Fibonacci levels to help you identify entry point.
If there is a pivot level or Fibonacci level that coincide with the support and resistance trend channel, this can be where you enter a trade and then exit the trade when it hits the next level.
For example: If you have entered a SELL trade at the R1 level, you can then exit your trade when it hits the pivot level. If you have entered a SELL trade at the Fibonacci 0.5 level, you can then exit your trade when it reaches the 0.618 level.
The above 2 methods is how I trade market that is moving sideway and I hope that you can master this trade and then make money from them.