One of the reasons for popularity among the traders of the currency market is its high volatility. During periods of strong movements, quotations can be well earned. However, they, as a rule, last long. But the consolidation of the market may be observed over a long period of time. It can also be used to profit. But for this you need to be able to identify consolidation and know about the basic rules of trading in such a market situation. Today I want to tell you about it. To begin with, I will explain that Such a market consolidation for those who are not at all familiar with this concept. This is a state of the market in which the price moves within a small range. In other words, the forces of “bulls” and “bears” are in relative equilibrium.
Consolidation borders
In order for trade to be effective, you must be able to competently determine the boundaries of consolidation. This can be done manually or using the appropriate indicators. The first method involves holding support and resistance levels For minima and maxima prices. Make it easy. In addition, you can use indicators such as Bollinger and Envelopes strips. However, in this case it is important to choose the right period in the settings.
Trade strategy
nothing complicated in it. Open trading deals from consolidation borders. If the price is approaching, and then beat off the bottom boundary, then open the BUY order. Accordingly, after a removal from the upper boundary, you open a Sell transaction. Mandatory Install Stop Loss. This can be done in two ways. A warrant limiting a possible loss by placing a little higher / below the border. But this option is not always effective, since stop loss can work with random price fluctuations. It is better to post SL a little further from the border. Its size can be equal to half the price movement range. As for Take Profit, it is set near the opposite border. But there is a risk that the price will unfold without reaching the level of the Take profit just a few Points. Therefore, I recommend fixing the profit profits. Part of the transaction can be closed when the middle range is reached. Well, then it is necessary to make a decision depending on the development of the market situation. Market consolidation can be a source of earnings for the trader. But for this you need to have the appropriate experience and follow the rules of manifestations. Inga Fedorova 29.01.2022 Recording Consolidation of the market. Trade rules. For the first time appeared forex-for-you.ru. .