There’s always a big fuss on the sideways markets, a lot of traders love them and a lot of traders hate them to death. I’m going to tell you everything a beginner trader needs to know about sideways markets and trading sideways.
Did you know there are 3 trends, directions in day trading?
Up, Down and Sideways trend
Sideways Markets, Channeling Market, Large Consolidation in the Market is all pretty much the same thing.
From sideways market indicators to how to find sideways markets in trading. Here you have everything you need to know about it.
So what exactly is the sideways trend meaning?
When there is a ton of indecision, something we as individual traders can do nothing about. The market bounces between 2 areas (resistance – the ceiling and support – the floor). I, stay completely out of this market.
Have you ever been in a situation where you are unsure of what to do?
You go back and forth, back and forth. Until something finally pops you into the full decision.
This is exactly what is happening here
Until that POP or breakout happens (it can be either to the up or down – we can NEVER predict). We sit out and watch, or close the charts for the day and do something else.
This is one of the most dangerous market directions in the market, and you will get burned. GUARANTEED! This is the sideways market meaning.
So, how to identify a sideways trend is easy. Usually, markets do that trend for a determinate period of time. You should know the very basics of trading. (if you don’t, do not worry. I’m simplifying it for you in this free course). That’s because you need to take a look at the bullish and bearish sideways movements.
The movements of those will make the market follow a determinate trend. Following the sideways markets definition I gave you up there and knowing the trading basics will make things easier for you.
You should know how to find sideways markets just knowing that.
As I say at the beginning of the post there’s a lot of people loving this trend and others (like me) that are against it.
Whether you love it or hate it, often you’ll want to avoid trading sideways. You can achieve this the same way as the previous point. To avoid it you need to know what it’s.
Set your resistance area and a support area. There you’ll know when the markets start their sideways movements.
You can find a sideways market in every single market, you just need to be at the right time at the right moment. There are plenty of ways to trade sideways.
I’m not going to enter much in details right now. Usually, traders wait for a breakout or a POP that happens out of the support and resistance areas of the trading chart. That’s pretty much like gambling, you can really know where it’s going to happen.
Yeah, you can apply a candlestick pattern to get a more “accurate” prediction of the breakout.
The most “profitable” area of a sideways trend market would be the middle. Day traders take advantage of the oscillation between the support and resistance areas. That’s before the breakout.
Recommended Read: The Best Price Action Patterns In Day Trading
There’s not a specific tool or indicator to determine a sideways tren besides your support and resistance lines.
But within the range-bound markets, there is a huge variation of trading indicators. Some of them are used to identify tops and bottoms with high precision.
Most trading indicators used for trading sideways markets are the Bollinger bands, a commodity channel index, and the STARC.
If you’re planning trading sideways. I recommend that you prepare a nice and solid technical analysis. Prepare a strategy for Sideways Market Trading. And if you’re planning gambling and trade on the breakout of a sideways trend I recommend you to learn candlestick pattern.
If you see that the volume has spiked a lot it would usually means that the POP is going to happen soon.