July 6, 2011
- in Uncategorized by schooloftrade
Trading Strategy for Sideways Markets/Sideways Ranges
Sideways Trading Ranges / Sideways Market
– ‘Flat market’
– ‘no trend’
– Flat Trigger Line
– Obvious swing highs/lows off a slower timeframe
– No new higher highs, and no new lower lows
What tools to we use to define the sideways ranges:
– F6 = horizontal line
– Ctr+F12 = box
– My custom-build swing-indicator (you get as a member)
How do we use these sideways range to make profit?
– Are we inside or outside today?
– Watch price action around the extremes (highs and lows)(reading tape)
– We then buy the lows and sell the highs when our entry rules confirm.
How do we know whether the highs/lows will hold on this range, or when they will break? When will there be a breakout that I can trade?
– 3 signs of price reversal at the highs to sell the highs
– 3 signs of price reversal at the lows to buy the lows.
– I want to see NO signs of a reversal to then look for the breakout
– I don’t just jump in blindly, I wait for a pullback with new highs, or wait for a retracements with new lows.
When do I need to sell the highs? Fake-out breakout is assumed:
– Momentum overbought at the highs
– When speed slows down into the highs
– Big Money Buyers are NOT at highs, and the big money sellers ARE.
When do I need to expect the breakout and try to buy above the new highs?
– Momentum oversold at the highs
– When speed increases buy above new highs w/ pullback
– Big Money Buyers are strong at highs, and the big money sellers ARE NOT
Little more advanced, slower timeframes and good tape readers can do this as well.
Think about the 3 phases of a Sideways Range
2 types of sideways ranges:
– Weak Market, indecisive, looking for clues/direction
o Fastest speed at the highs/lows/extremes
o Slowest Speed in the middles
– Protective, protecting our capital.
o Fastest speed in the middle of the range
o Slowest Speed comes at the extremes
o Usually the BIG MONEY gets this started
Golden Lunch (Rick)
– Late morning move usually comes after we see very little volume during the US morning session.
– You will not see a golden lunch on Friday’s or any day where there is a major news event the follow morning or the same day in the afternoon session.
– We never know 100% until we see it happen
– It follows the 1130am euro close and then is classified as a low volume move (while the cat’s away the mice will play)
BMT = Big Money Trigger Line
– This is our favorite final target
– And the worst place to enter a trade
– Every chart has one, they are all different
– When they are flat they are VERY dangerous.
– When I see the 4range BMT holding up the price from rising/falling that tells me this market is VERY WEAK, so trade the price reversals, not the breakouts (think of this like an inside day)
– It’s a final push up/down by buyers or sellers trying to push new highs or new lows
– The SPEED of the move to new lows/highs and then consequently the reversal is the main thing to watch
– If you don’t look for it, you’ll miss
– Token = false (fake-out breakout)
–
Failure as important as the confirmation
– My favorite failure pattern is the wave failure
– Pattern failures are almost more important than when patterns confirm
Inconsistent Price Action
– Im thinking about SPEED
– Speed and divergence
Divergence Trading Method:
– Watch the video in the adv course
– Watch the divergence videos on the blog
