Trend and Trading Range
Trader tries to profit by means of buy low and sell high. With just a glance at the chart shows that the market more in position ranging than in the trend.
Trend occurs when prices continue to rise or fall. On an uptrend, each bar reached high positions higher than sebelummnya, and each dropped at a higher position than the position of the previous down. In the prevailing downtrend otherwise. When the market in a state ranging, each movement has a high position which is almost the same as well as its low position.
Traders need to know about trends and ranging. Easier to trade when the trend. It's harder to make money when the price is sideways.
Trading on the current trends and the time ranging require different tactics. When following trends, you can survive on your position during the ongoing trend. When trade in ranging, you must be nimble and close your position when the reversal signs begin to emerge.
Another difference is seeing the strength of the movement. You have to follow the movement for trend occurred - buy and sell when the current uptrend downtrend. When the ranging, you do the opposite of the current trend.
Mass psychology.
Uptrend occurs when the bull is stronger than the bear and make prices rise. If the bear is able to push the price to go down, the bull will fight, defeat, and forced prices to new highs. Vice versa.
When the bull and bear as strong or weak, prices remained at the position ranging. When the bull tried to make prices rise, bear influence so the price down.
Ranging can be likened to a fight between gang. They pushed each other back and forth, but no one wins. Trend as a larger gang chasing a smaller alley. Once upon a time a smaller alley stop and fight but still forced to re-run.
The Hard Right Edge.
Knowing the trends and ranging is one of the hardest things on technical analysis. It is easier to see it while in the middle of the chart, compared to see when they are just beginning.
Trend and ranging clearly visible on the chart that is already past. Paa experts show charts - charts that long at the seminar and making it easy to see the trend. The problem is we have to take a decision when the trend is starting to make a profit.
The past is certainly and easily analyzed, while the future is very uncertain. When you see a trend, it may be an opportunity to follow already missed. Nobody knows when the trend will turn out to be ranging. When you realize it, you will lose money because you still do trade with the trend analysis is currently ongoing.
Many chart patterns and conflicting indicator signal when the chart begins. You have to make decisions based on probability in conditions of uncertainty.
Most people do not accept the uncertainty. They have a strong emosiyang to be true. They remain in the position of loss, waiting for the market to turn around and take their side. Trying to become Bena in the market becomes very expensive. The professionals leave the current unfavorable market position. When the market away from your analysis, immediately cut losses without a doubt - doubt.
Methods and techniques
There is not a magic method for identifying trends and ranging. There are several methods, and you should combine them. As they support each other, then the result becomes clear. When they are opposite each other, you better stay away from the market first.
- Analysis of the pattern of highs and lows. When there is a movement in which the high and low stop at a higher level than before, it can be concluded that there was a uptrend. Similarly sabaliknya. However, if the pattern seen not beratuan means the market is ranging.
- Create an auxiliary line to observe uptrend or downtrend. Drastic changes in high or low on the daily chart can be seen at least in the data charts for one week. When you study the chart, you will be better in view of the position. Technical analysis is a combination of science and art.
- Use exponential moving average (EMA) of 13 or more to help see the trend. If there is no high or a new low in a month, then the market is likely in the trading range.
- Several indicators such as MACD can be used to see the trend.
When you see an uptrend and you want to buy, you must determine to immediately buy or wait longer. If you buy as soon as possible, you will immediately follow the trend, but the stop loss should be placed into a larger and higher your risk.
If you wait longer, your risk is smaller, but it will have four rivals, namely that want to add to the position, who wants to cover losses due to short, which has not had time to open a position, and that has opened a sell position and still want to buy.
When the market is ranging and you wait for a breakout, you must determine to put the position in anticipation of a breakout, during a breakout, or when prices turn around after a breakout true - true. If you choose several positions, use your financial management.
Whatever your method, there is a money management rules that can help you to not perform high-risk trading. The distance between entry and stop loss should not exceed 2% of your quantity. However interestingly market conditions, it is better you do not do a trade if the stop loss you need exceeds that value.
Money management is different to the current trends and ranging. The current trend is to use a small quantity with a stop loss is greater. With so at your own risk manageable. If the ranging then a larger quantity to the smaller stop loss.
Determining a position to entry are very important in the ranging. You must be careful because of the limited profit potential. While the trend is not so influential it as long as you do not fight it.
When you can not distinguish between the trend ranging better not make trades.
Conflicting Timeframe
Most traders do not care about the fact that the market usually in conditions ranging trend and at the same time. Usually they choose a time frame such as daily or hourly and trade based on the daily chart. Saar their attention focused only on the hourly or daily chart, the trend of other timeframes, such as weekly or M15 infiltrate and interrupted their plans.
Market appeared in several time frames simultaneously, from the m1, m5, M15, M30, h1, h4, to weekly and monthly, as well as some other timeframe. Market like a good fit to buy the daily, but on weekly may indicate a sell, and vice versa. Signals from various timeframes sometimes contradictory. Which one would you follow?
When you are in doubt about a trend, analysis of the chart larger timeframe of when you will be trading.
Traders who were lost often thought to win if they can get data more quickly and focus on a lower time frame. But the result is often the opposite. Different signals in different timeframes for the same pair is a puzzle - the biggest puzzle in the market analysis. Trend is considered appearing on the daily chart may be only a small shift in the weekly chart is currently sideway. Which like sideway on the daily chart as possible at hourly trend kua, and so on. Professionals when in doubt, they will see a larger timeframe, while beginners focus on the short term charts.
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