Ranging Market

Definition of “Ranging Market”: A Ranging Market a market where the price is moving back and forth between a higher price and a lower price. It is commonly referred to as range bound, choppy, sideways or flat market.

As a trend trader, my biggest enemy is a ranging market, because there is nothing to be gained from a ranging market as it has no clear trends.

You’d end up losing most trades if you traded in it.

How do I identify a ranging market?

Personally, my favourite indicators of a ranging market are:

  1. ADX is constantly below 25.
  2. VWAP is a relatively flat line.

The big challenge is in learning to walk away on days when the market is trading sideways.

I think today was such a day.

It’s like you’re all ready and raring to go make some good trades, only for the realisation to slowly sink in.

Yes, it’s frustrating to not be able to find good trade setups.

My older self did not know how to identify a sideways market.

My older self would have tried to force some trades, tried to “see” some setups that aren’t actually there, and tried to jump into some impromptu trades for a quick profit.

And I would likely have had lost money on those trades. And in some instances, I might have even gotten emotional and revenge traded, eventually ending the day with even greater losses.

Been there, done that.

But today, I decided to just shut down my computer and walk away. No trading for today.

And I’m at peace with that.

Remember, it’s far better to have zero profits for the day than to make losses.

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