What Should A Trader Do In A Sideways Market ?
Markets always go through trending and sideways phases. A sideways phase gives rise to trending phase and after trending phase we always get a sideways phase. This is very much predictable in any market, any timeframe.
If a trader is trading a trend following trading method trading Index Futures such as Nifty Futures , the sideways phase will give many false starts, whipsaws giving him losses.Trend following methods always make money during the trends and loose money in sideways markets. So if one is following a trend following method for all phases, he may make money overall if the length/ range of sideways phase is smaller than trending phase....but if the sideways phase lasts long...the losses will mount. I have seen some average crossover trading methods giving 8-10 consecutive loosing trades in last 8-10 days when market is sideways.
How does one handle this situation ? There are ways to find out ( though a bit after the phase starts ) that we are in sideways market. Once that is identified, either don't trade a sideways phase with trend following method or if you are trading thinking that the market has come out of sideways phase, trade small so that till market really starts trending your losses are kept minimum due to false starts....and when trend starts again, you can start making money with your methods.....not trading in choppy sideways markets which are unpredictable is very important trading decision.
Last few days being sideways many traders asked how to handle such a phase as they are loosing and getting whipped ....and remember that after sideways phase, a trending phase definately comes.....so be in good shape to trade that trending phase which will follow.
Smart_trade
Markets always go through trending and sideways phases. A sideways phase gives rise to trending phase and after trending phase we always get a sideways phase. This is very much predictable in any market, any timeframe.
If a trader is trading a trend following trading method trading Index Futures such as Nifty Futures , the sideways phase will give many false starts, whipsaws giving him losses.Trend following methods always make money during the trends and loose money in sideways markets. So if one is following a trend following method for all phases, he may make money overall if the length/ range of sideways phase is smaller than trending phase....but if the sideways phase lasts long...the losses will mount. I have seen some average crossover trading methods giving 8-10 consecutive loosing trades in last 8-10 days when market is sideways.
How does one handle this situation ? There are ways to find out ( though a bit after the phase starts ) that we are in sideways market. Once that is identified, either don't trade a sideways phase with trend following method or if you are trading thinking that the market has come out of sideways phase, trade small so that till market really starts trending your losses are kept minimum due to false starts....and when trend starts again, you can start making money with your methods.....not trading in choppy sideways markets which are unpredictable is very important trading decision.
Last few days being sideways many traders asked how to handle such a phase as they are loosing and getting whipped ....and remember that after sideways phase, a trending phase definately comes.....so be in good shape to trade that trending phase which will follow.
Smart_trade
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