Forex trading: Trend vs. Range trading

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    matildacochran
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    We have all heard the axiom, “the trend is your friend”; well this can be a very true statement, assuming that you have a well thought out trading plan that allows you to take advantage of market trends. However, it is very obvious by looking at any price chart that markets typically spend more time in consolidation or trading ranges than they do trending. Ideally we would like to develop a trading strategy that allows us take advantage of market consolidation as well as market trends.

    Most oscillating indicators such as stochastics, rsi, or
    MACD, are designed to show you when a market is over-sold or over-bought. For more regarding FX Trading Master take a look at the web-site. The
    problem with this is that when a market is in a strong trend these indicators
    will show over-bought or over-sold on a small pullback in the trend. So if you
    take the entry signals from these indicators during a strong market trend, you
    will get slaughtered. They do work semi-good in a ranging market; however they
    are still quite unnecessary to developing a widely applicable trading system.

    Ideally what we would like to have is a trading system that
    gives us a unique market perspective which allows us to profit in all three
    market conditions. Once you accept the fact that indicators only work in
    certain market conditions and even then are really just confusing the true
    price action that you should be concerning yourself with, you can get down to the
    real meat of the market, which is analysis.

    Stripping your charts of all unnecessary and confusing
    indicators will leave you with only price bars. After all, aren’t we mainly
    making our trading decisions off of price anyways? Why then would you look at
    something that is derived from price when you could just look at the price
    itself? Any entry or exit signal that any indicator will give you has already
    occurred in the market in the form of a price pattern. All we need to do is
    educate ourselves on what to look for and we will be able to spot entry and
    exit signals right as they occur, instead of 5-10 bars later via some lagging
    indicator.

    So to re-cap, in order to consistently profit in a trending
    or ranging market we will need a trading methodology that gives us the
    knowledge to do both. Price action analysis, in my opinion, is the only
    educational tool available to traders that will give you the necessary
    perspective on markets that you need to develop a trading strategy that will
    allow you to consistently profit. Whatever market condition you encounter;
    trending or consolidation, a solid back round in will
    give you the ability to devise an applicable trading plan and consistently
    profit.

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